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LIBRARY 

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diversity  of  California. 

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\sion  No.^Y  5~6~   .    Class  No. 


PLAIH  TRUTHS 


Vbout  StoGk  Speculation 


HOW   TO   AVOID   LOSSES 


IN 


*?r 


ALL  STREET. 


WITH 


VISITORS'  DIRECTORY 


IN 


AND  AROUND   NEW  YORK. 


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Copyright  by 

E.  V.  SMITH,  Proprietor. 

1887. 

ALL    RIGHTS    RESERVED. 


1 


PREFACE. 


THIS  work  contains  plain  truths,  plainly  told,  of 
the  dangers  and  folly  of  dealing  on  margins.  To 
the  uninitiated  it  is  a  revelation  and  exposure  of 
the  trickery  and  sharp  practices  which  prevail  in 
the  marts  of  speculation.  It  is  a  warning  to  keep 
out  of  Wall  Street  ;  and  any  man  or  woman  who, 
after  reading  this  book,  goes  there,  will  do  so  with 
their  eyes  wide  open  to  the  traps  and  pitfalls 
which  will  surround  them.  It  tells  of  the  only 
true  and  generally  safe  way  to  deal  in  stocks  and 
make  money.     To  the  investor  it  is  an  invaluable 


UK 


All  of  which  is   respectfully   submitted, 


pro  bono  publico,  by 

The  Author. 


INDEX. 


Page 

Chapter               I.  Wall  Street  Glossary i 

II.  The  American  Bourse 12 

III.  Typical  Bankers  and  Brokers 23 

IV.  Collapse  of  a  Bull  Market 34 

V.   Manipulating  Banker-Brokers 39  -, 

VI.  Sure  Points 44  V 

VII.  Present  Methods 48 

VIII.  Northern  Pacific  Railroad 56 

IX.  Union  and  Central  Pacific  Railways.  . .  64 

X.  Events  Preceding  Panic  of  1884 69 

XI.  A  Successful  Operator  76 

XII.  Short  Sales  Dangerous 85 

XIII.  Wall  Street  Vicissitudes 89 

XIV.  Wall  Street  Speculators 102 

XV.  Swindles,  Remote  and  Recent 112 

XVI.  Railroad  Rivalry 124 

XVII.  Manipulation 131 

XVIII.  Petroleum  Exchange 141 

XIX.  Produce  Exchange 148 

XX.  Cotton  Exchange 156 

XXI.  Public  Stock  Exchanges 158 

XXII.  Lower  Scale  of  Gambling 179 

XXIII.  Big  Business  on  Small  Capital  182 

XXIV.  Office  Expenses 187 

XXV.  The  Market 197 

XXVI.  The  Road  to  Success 211. 

XXVII.  Possibilities  of  Railway  Finance 224 

XXVIII.  Exegesis 228 

XXIX.  Rich  Men  of  Europe 230  N 

XXX.  Inequalities  of  Taxation 236 

XXXI.  King  Bacchus 244 

XXXII.  Wall  Street  Detectives 249 

XXXIII.  The  Sub-Treasury 252 

XXXIV.  Custom  House 260 

XXXV.  Clearing  House  Banks 263 

Visitors'  Directory 273 


STOCK  SPECULATION. 


CHAPTER  I. 
WALL   STREET   GLOSSARY. 

THIS  chapter  is  to  explain  the  technical  terms 
used  in  stock  speculation. 

Bulls  are  optimists.  They  buy  stocks  for  an 
advance,  and  "  go  long  of  the  market." 

Bears  are  pessimists.  They  sell  stocks  for  a 
decline,  and  "  go  short  of  the  market." 

Money  is  made  or  lost  with  equal  facility, 
whether  stocks  go  up  or  go  down.  It  all  depends 
on  being  on  the  right  side  of  the  market. 

Bulls  are  not  always  bulls ;  neither  are  bears 
always  bears.  .  They  are  bulls  at  one  time,  bears 
at  another,  as  occasion  seems  to  serve.  Some, 
while  bearish  for  a  decline  to  enable  them  to  buy 
cheap,  are  always  bulls  on  moral  principle — that  it 
is  wrong  to  sell  property  they  do  not  possess. 

A  bear  must  borrow  stock  from  day  to  day  to 
keep  good  his  deliveries  of  stock  he  sold,  but  did 
not  have.     This  is  done  for  him  by  his  broker. 

A  "  corner  or  squeeze  "  is  when  it  is  difficult  or 
•ssible  U  to  borrow  stock  to  make  a 


2  STOCK 

delivery  on  their  contracts.  Hence  they  are  forced 
to  buy  in  the  stock  they  sold,  but  did  not  have,  at 
whatever  price  the  bulls  may  choose  to  ask. 

"  Loaning  rates  "  are  often  exacted  for  stock 
loans  when  there  is  a  large  short  interest  out- 
standing, and  stocks  are  made  scarce  in  the  "  loan 
crowd."  The  rate  may  be  but  39  cents~per  day 
for  the  loan  of  too  shares,  in  addition  to  the 
market  value  of  the  stock  wanted,  or  it  may  be  -§- 
or  $12.50  per  day.  When  the  bears  are  cornered 
and  pressed  to  the  wall,  the  rate  may  be  from  1 
per  cent,  or  $100  to  5  per  cent,  or  $500  for  one 
day's  loan  of  each  100  shares  of  stock. 

The  "  loan  crowd  "  are  the  brokers  who  congre- 
gate by  themselves  in  the  board-room  with  stocks 
to  loan. 

Cliques  and  pools  are  combinations  of  capital- 
ists formed  to  control  the  specialties  in  which  they 
are  interested.  Bull  pools  boom  the  market  for  a 
rise  or  hold  values  steady  against  the  attacks  of 
the  bears.  Bear  pools  operate  to  destroy  values 
to  scare  timid  holders  of  long  stock  into  liquida- 
tion and  to  bring  about  a  decline  to  enable  them 
to  cover  their  shorts  at  a  big  profit. 

Deliveries  of  stock  bought  "  regular  "  must  be 
made  before  a  certain  time  on  the  following  busi- 
ness day.  In  default  complaint  is  made  to  the 
Chairman  of  the  Exchange,  who  buys  in  the  stock 
"  under  the  rule,"  and  charges  all  differences  to 
the  delinquent. 


SPECULATION.  3 

On  Options — "  Buyer  3-30  or  60,"  or  "  seller  3- 
30  or  60,"  either  party  has  3-30  or  60  days,  as  the 
case  may  be,  to  call  for  or  tender  the  stock  at  the 
price  named. 

Oversold  is  when  the  bears  have  overreached 
themselves  and  sold  more  stock  than  there  is 
afloat. 

Overloaded  is  when  the  bulls  have  bought  more 
stock  than  they  can  take  and  pay  for. 

Investors  are  those  who  buy  and  pay  for  their 
stocks  for  the  dividends.  They  aim  to  buy  low 
in  the  hope  ultimately  of  selling  out  at  a  big  profit, 
in  addition  to  the  income. 

Tape  speculators  are  those  who  operate  for 
catch-penny  profits  from  day  to  day  on  margins. 
They  are  as  regular  habitues  of  the  offices  as  the 
brokers  themselves. 

Averaging — If  a  bull  buys  100  or  more  shares  of 
stock  at,  say  90,  and  it  goes  down  ten  points,  he 
will  aim  to  buy  more  at  80.  His  stock  then  aver- 
ages him  85,  plus  commissions.  If  the  stock  goes 
to  8514,  he  can  get  out  just  even,  provided  he  has 
no  interest  to  pay  for  carrying.  All  the  stock 
goes  above  85^  will  be  his  profit.  With  the  bear 
the  case  is  reversed.  If  he  sells  stock  short  at  80, 
and  it  goes  up,  he  will  aim  to  sell  more  at  90,  to 
average  down. 

Margins — The  banker-broker  usually  requires 
$1,000,  or  10  per  cent.,  to  be  put  up  as  security  for 
each  100  shares  he  buys  for  customers.     With  this 


4  STOCK 

margin  as  a  basis,  the  banker  will  buy  ioo  shares 
of  stock  that  costs  anywhere  up  to  $10,000  or 
$15,000,  and  "  carry  "  it  for  his  customers.  He 
will  credit  the  customer  with  interest  on  the  $1,000 
margin  he  put  up  and  debit  him  with  legal  interest 
on  all  the  stock  cost  above  the  margin,  and,  in 
addition,  charge  him  with  whatever  extra  rate  of 
interest  he  has  to  pay  in  time  of  monetary  strin- 
gency. Thus,  if  100  shares  of  stock  cost  $10,000, 
the  customer  would  be  credited  with  interest  on 
$1,000  and  charged  interest  on  $10,000  until  the 
deal  was  closed.  In  a  steady  market  some  brokers 
will  carry  stock  for  customers  on  a  5  per  cent, 
margin,  or  even  less.  If  a  customer  gets  badly 
"left,"  the  broker  will  demand  more  margin  to  be 
put  up ;  failing  in  that,  the  broker  will  take  good 
care  to  close  out  the  deal  in  time  to  save  his  com- 
missions and  interest. 

Commissions  are  \  per  cent.,  or  $12.50  to  buy; 
the  same  to  sell,  making  the  cost  of  a  turn  in  100 
shares  $25. 

Call  and  Time  Loans — Although  the  legal  rate 
of  interest  in  New  York  is  6  per  cent.,  since  the 
repeal  of  the  Usury  Law,  relating  to  call  loans,  by 
the  Act  of  1882,  the  banks  can  charge  any  higher 
rate  they  choose  when  money  is  scarce.  From  the 
1st  of  January,  1884,  UP  to  the  first  months  of 
1886,  owing  to  the  great  plethora  of  money,  call 
loans  were  obtained  from  day  to  day  on  good  col- 
lateral at  from  1  to  2x/2  per  cent,  per  annum.     At 


SPECULA  TION.  5 

one  time  the  banks  had  about  $65,000,000  reserve 
above  the  25  per  cent,  legal  requirements,  and  a 
total  capital  of  over  $160,000,000,  that  almost  went 
begging  for  employment.  During  all  this  time  the 
brokers  could  obtain  all  the  money  they  required 
from  day  to  day  at  from  1  to  3  per  cent,  by  hypo- 
thecating the  stock  they  carried  for  customers  as 
collateral,  or  they  could  obtain  time  loans  at  3  to 
4  per  cent,  per  annum  ;  and  during  all  this  time 
they  charged  customers  6  per  cent.,  thus  making 
fat  profits  on  both  commissions  and  interest. 

Points — In  one  sense  prices  are  said  to  have 
advanced  or  declined  one  or  more  points,  mean- 
ing prices  had  gone  up  or  down  one  or  more  per 
cent.,  or  one  or  more  dollars  per  share.  In  another 
sense,  a  man  has  the  point  that  the  market  or  a 
certain  stock  will  advance  or  decline.  He  has  the 
point  or  a  pointer  on  the  movements  of  the 
market. 

"  The  Street  "  means  the  exchanges  and  the 
brokerage  offices  within  the  speculative  arena  on 
Wall  and  the  neighboring  streets. 

"Cats  and  Dogs,"  also  called  the  Fancies,  are  non- 
dividend  paying  stocks,  which  have  small  intrinsic 
value,  except  to  be  inflated  like  "  South  Sea 
Bubbles,"  to  the  profit  of  the  bulls  or  sold  short 
and  raided  down  in  the  interest  of  the  bears. 

Liquidation  in  Wall  Street  is  peculiar.  If  a 
man  loaded  down  with  obligations  should  sell  his 
stocks  on  a  rising  market,  and  make  anywhere  from 


6  STOCK 

one  to  ten,  fifteen  or  more  dollars  a  share,  that 
would  not  be  regarded  as  liquidation,  even  though 
he  used  the  proceeds  to  pay  his  debts.  But  if, 
through  the  influence  of  fear,  when  distrust  pre- 
vails, he  should  order  his  stocks  sold  at  a  loss  of 
one,  ten  or  fifteen  dollars  a  share,  that  would  be 
Simon  Pure  liquidation,  and  is  the  kind  the  bears 
always  work  and  hope  for. 

Washes  or  Wash  Sales  are  purely  fictitious,  and 
are  made  by  connivance  between  two  brokers,  or 
two  sets  of  brokers,  the  one  to  bid  up  or  bid  down 
stocks,  the  other  to  appear  to  buy  or  sell  the  stock. 
Resort  is  had  to  "  washes  "  to  attain  various  ends 
at  little  or  no  expense.  A  wash  may  be  had  to 
get  a  quotation  for  an  inactive  stock  reported,  or 
it  may  be  had  to  sustain  prices  when  the  market 
is  in  a  condition  of  stagnation  and  apathy,  and 
values  tend  to  waste  away  under  the  offerings  of 
tired  holders.  Big  bulls  loaded  with  stocks  may 
have  overstayed  their  market,  then  recourse  is 
often  had  to  washes  to  give  the  market  an  appear- 
ance of  firmness  arid  activity  while  they  are  feed- 
ing out  their  stocks  to  the  fools  who  are  tempted 
to  make  real  purchases.  Bears  also  wash  values 
down  to  shake  out  long  stock,  and  enable  them 
to  cover  their  shorts  at  a  good  profit,  or  to  buy 
in  a  good  line  of  long  stock  at  low  prices,  pre- 
paratory to  a  boom.  In  a  moral  point  of  view, 
the  system  of  stock  washing  is  as  villainous  as  the 
methods  of   the  bunco  steerer.     Outsiders  must 


SPECULA  TION.  7 

pay  $25  on  each  turn  buying  and  selling  100 
shares.  Brokers  can  have  their  orders  executed 
by  other  brokers  for  $2  and  $4  for  buying,  and  the 
same  for  selling  100  shares.  Brokers  can  buy  or 
sell  for  themselves  free  ;  hence,  two  sets  of  brokers 
having  the  same  axe  to  grind  on  certain  lines  of 
stocks  can  wash  prices  up  or  down  free,  gratis,  for 
nothing. 

Room  Traders — One  class  of  brokers  execute 
orders  for  their  customers  on  commission,  and  do 
not  speculate  themselves.  Others  operate  both 
for  themselves  and  on  account  for  their  customers. 
Room  traders  speculate  solely  for  their  own  ac- 
count, and  the  market  is  what  they  make  it  when 
the  manipulating  pools  have  no  movements  on 
hand. 

Stock  Privileges  are  contracts  entitling  the 
holder  to  receive  or  deliver  a  certain  stock  at  any 
time  within  a  period  limited,  usually  to  30  or  60 
days.  The  buyer  pays  a  fixed  price  for  the  con- 
tract, and  his  entire  liability  in  the  transaction  is 
limited  to  that  amount. 

A  Put  entitles  the  holder  to  put  or  deliver  the 
stock  to  the  maker  of  the  contract  at  any  time 
within  the  life  of  the  privilege.  A  stock  may  be 
worth  50  at  market.  The  put  may  read  46  per 
cent.  The  buyer  pays,  say  $150  for  the  contract 
The  stock  must  decline  to  below  46  before  the 
buyer  can  recover  any  part  of  the  price  he  paid 
for  his  privilege.     At  44^  he  stands  to  recover  his 


8  STOCK 

$150,  and  all  the  stock  declines  below  44I-  will  be 
his  profit,  if  he  puts  his  stock  at  the  right  time. 

A  Call  is  the  reverse  of  a  put,  and  entitles  the 
holder  to  demand  the  delivery  of  the  stock  to  him 
at  the  price  named.  If  the  stock  is  worth  50  at 
market,  the  call  may  read  54  per  cent.  If  the  con- 
tract cost  $150,  the  stock  must  advance  to  554 
before  he  can  recover  the  purchase  money.  All 
it  goes  above  5  5 -J-  will  be  his  profit. 

A  Spread  is  both  a  put  and  a  call.  If  the  stock 
is  50  at  market  and  the  put  price  is  46,  and  the 
call  price  is  54,  and  he  paid  $150  for  the  double 
privilege,  the  stock  must  decline  to  44!  or  ad- 
vance to  55-J  before  he  can  recover  his  purchase 
money.  All  the  stock  goes  below  44-J  or  above 
55-J  will  be  his  profit. 

A  Straddle  is  also  a  double  privilege,  and  usu- 
ally costs  much  more  than  a  put,  call,  or  spread. 
The  price  named  in  the  straddle  is  the  current 
market  price,  say  50.  The  privilege  may  cost 
$500.  The  stock  must  advance  above  55  or  de- 
cline below  45  before  he  can  recover  any  part  of 
his  purchase  money.  If  the  stock  goes  up  to  60 
or  down  to  40  he  can  get  back  his  $500,  and  all 
the  price  goes  above  60  or  below  40  will  be  his 
profit.  It  all  depends,  however,  on  his  closing  out 
the  deal  when  he  has  a  profit  in  sight  within  the 
life  of  the  contract  ;  otherwise,  if  he  waits  too 
long  his  profits  may  disappear  like  the  birds  of  the 
night. 


SPECULA  TION.  9 

Stock  Privileges  are  not  recognized  by  the  rules 
of  the  Stock  Exchange.  But  the  makers  are  usu- 
ally capitalists  abundantly  able  to  make  good 
their  obligations. 

Speculators  buy  privileges  as  a  protection  against 
wide  fluctuations  in  prices.  Bears  buy  calls  and 
sell  stocks  short  against  them  for  profitable 
turns.  Bulls  buy  puts  and  go  long  against  them, 
and  if  "  badly  left  "  they  are  protected  to  a  cer- 
tain extent  against  losses. 

The  central  point  of  stock  speculation,  on  which 
the  whole  business  revolves,  is  the  fact  that  on 
the  purchase  or  sale  of  100  shares  of  stock,  each 
fluctuation  of  1  per  cent.,  up  or  down,  represents 
a  gain,  or  loss,  of  $100. 

The  broker  is  simply  an  agent  acting  for  his 
principal.  The  ultimate  responsibility  is  always 
with  the  customer.  He  must  take  the  risk/not 
only  of  the  failure  of  his  own  broker,  but  of  losses 
occasioned  by  the  fraud  or  failure  of  others  with 
whom  his  broker  has  made  contracts  for  him  in 
good  faith. 

The  most  potent  and  indispensable  adjuncts  to 
stock  speculation  are  the  Stock  Indicators,  or 
"  Tickers,"  and  the  "  News  Tape."  These  are 
electrical  printing  machines  by  which  quotations 
from  the  Stock  Exchange,  and  news  and  rumors 
of  good  or  ill  omen,  gathered  at  the  news  agencies, 
are  instantly  flashed  over  the  wires  and  reeled  off, 
in  print,  in  all  the  brokers'  offices,  as  well  as  in 


io  STOCK 

the  bar-rooms  and  restaurants  where  speculators 
congregate. 

There  is  also  a  manifold  news  service,  being 
letter-press  copies  on  tissue  paper,  or  slips  run 
through  lightning  printing  machines  and  distribu- 
ted by  messengers  as  fast  as  news  is  gathered. 

It  is  shrewdly  suspected,  if  not  an  actual  fact, 
that  these  agencies  are,  upon  occasion,  under  the 
subsidy  of  the  big  manipulators  of  the  market, 
who  have  news,  rumors  and  roorbacks  calculated 
to  lead,  or  mislead,  ground  out  to  order,  to  fur- 
ther their  interests. 

Wall  Street  is  the  center  of  financial  and  politi- 
cal news  wired  from  all  over  the  country,  or  flashed 
by  cable  from  all  over  the  world.  The  death  of 
a  man  great  in  politics  or  finance,  big  failures,  de- 
falcations, defaults  in  interest  on  railway  bonds, 
etc.,  carry  dismay  into  the  ranks  of  the  bulls,  and 
correspondingly  elate  the  bears.  Called  United 
States  Bonds  by  the  Secretary  of  the  Treasury, 
names  and  time  of  winning  horses  at  Saratoga* 
Brighton,  Monmouth  Park  and  Cedarhurst,  and 
the  progress  of  the  international  yacht  races  were 
all  noted. 

The  difference  between  New  York  and  Lon- 
don time  is  five  hours.  When  it  is  io  o'clock  A.  M. 
in  the  latter  place  it  is  5  o'clock  A.  M.  in  the  for- 
mer. Several  times  a  day  quotations  of  American 
stocks  in  London  are  received.  By  figuring  the 
difference    in    the    rate   of  exchange  it  is  readily 


SPECULA  TION. 


V 


ascertained  whether  stocks  are  higher  or  lower 
there  than  in  New  York.  The  strength  of  one 
market  is  reflected  by  that  of  the  other. 

There  are  a  half  dozen  or  more  Wall  Street 
dailies,  devoted  to  the  interests  of  speculation. 
They  give  stock  news  and  gossip  from  the  bull  or 
bear  standpoint,  and  essay  to  forecast  the  move- 
ments of  the  market.  But  it  is  hit  or  miss  ;  if 
they  hit  right  two  or  three  days  in  succession, 
they  are  always  prophets  after  the  event. 

The  morning  or  evening  papers  all  give  more 
or  less  extended  market  reports  and  gossip,  and 
pander  to  the  instinct  for  stock  gambling.  Some 
papers  employ  paid  financial  writers.  "  In  and 
Out  of  Wall  Street,"  by  "  Rigolo,"  was  formerly 
a  feature  in  Monday's  edition  of  the  New  York 
Sun,  and  were  eagerly  devoured.  He  was  said  to 
have  received  $100  a  column. 

The  "  Wall  Street  "  column  in  Saturday's 
Evening  Telegram  has  more  interest  to  a  certain 
class  of  readers  than  the  instructive  cartoons  of 
De  Grimm,  the  artist. 


12  STOCK 


CHAPTER  II. 

THE   AMERICAN   BOURSE. 

And  rumor  (she's  a  famous  liar,  yet 
'Tis  wonderful  how  easy  we  believe  her) 
Had  whispered  he  was  rich,  and  all  he  met 

"In  Wall  street  nodded,  smiled  and  tipped  the  beaver  ;  " 

All,  from  Mr.  Gelston,  the  collector, 

Down  to  the  broker  and  bank  director. 

A  few  brief  years  passed  over,  and  his  rank 

Among  the  worthies  of  that  street  was  fixed  ; 
He  had  become  director  of  a  bank, 
And  six  insurance  offices,  and  mixed 

Familiarly,  as  one  among  his  peers, 
'  With  grocers,  dry  goods  merchants,  auctioneers. 

Brokers  of  all  grades— stock  and  pawn — and  Jews 

Of  all  religions,  who  at  noonday  form, 
On  'Change,  that  brotherhood  the  moral  muse 
Delights  in,  where  the  heart  is  pure  and  warm, 
And  each  exerts  his  intellectual  force 
To  cheat  his  neighbor — legally,  of  course. 

— Fitz  Greene  Halleck. 

WITH  the  exception  of  a  long  narrow  hallway  to 
the  board  room,  the  New  York  Stock  Ex- 
change is  not  on  Wall  Street  at  all.  It  is  on  Broad 
and  New  Streets,  near  the  centre  of  the  block 
between  Wall  Street  and  Exchange  Place.  It 
consists    of   two   buildings    of   entirely  opposite 


SPECULATION.  13 

character,  yet  joined  together  and  thrown  into 
one.  On  Broad  Street  it  is  five  stories  high,  with 
a  white  marble  front  and  portico.  The  "  long 
room  "  is  on  the  first  floor,  and  the  "  bond  room  " 
is  on  the  floor  above.  In  the  basement  are  coat 
rooms,  and  safe  deposit  vaults  of  solid  masonry. 

The  "board  room  "  is  a  substantial  brick  build- 
ing with  stone  trimmings  and  a  slated  gable  roof. 
It  is  on,  and  runs  parallel  with  New  Street,  has 
long  windows  with  stout  iron  shutters,  and  is  like 
and  yet  unlike  a  country  church.  The  height  of 
the  room  from  floor  to  ceiling  is  equal  to  the 
height  of  the  four  story  and  high  stoop  building 
adjoining  it  on  the  south.  It  is  in  this  room  that 
more  money  is  made  and  lost  by  insiders  and 
more  fortunes  of  the  outside  public  are  swamped 
than  in  any  other  business  in  America. 

To  become  a  member  of  the  Stock  Exchange  a 
man  must  buy  a  "  seat,"  then  he  must  apply  for 
membership,  and  if  not  black-balled,  he  is  ad- 
mitted and  becomes  a  full  fledged  broker. 
"  Seats  "  are  a  myth  so  far  as  the  board  room  is 
concerned.  It  is  an  open  floor  with  not  sittings 
enough  for  more  than  50  or  60  of  the  1 ,  100  brokers. 
Originally  a  membership  cost  $100.  As  the  num- 
ber of  brokers  and  the  volume  of  business  grew 
and  increased,  the  price  of  a  seat  also  increased, 
until  now  a  seat  is  worth  from  $25,000  to  $30,000, 
and  the  highest  price  ever  paid  was  $35,000,  a 
year  or  two  since. 


14  STOCK 

On  the  wall  back  of  the  north  gallery  of  the 
present  board  room  is  the  legend,  "  Erected 
MDCCXCII"  (1792);  this,  however,  can  refer 
only  to  the  time  when  the  stock  brokerage  busi- 
ness was  started  in  a  small  way,  for  the  present 
Broad  Street  building  was  finished  and  occupied  in 
1865  and  the  building  on  New  Street  in  1880. 

The  Board  of  Brokers,  as  it  was  called  before 
it  claimed  to  be  entitled  The  New  York  Stock 
Exchange,  commenced  business  with  eighteen 
members,  and  met  in  a  room  over  what  was  known 
as  Jauncey's  stables,  in  Wall  Street.  James  W. 
Bleeker,  David  Clarkson,  Samuel  Ward,  James  G. 
King  and  G.  G.  Howland  were  among  the  leading 
members.  The  Board  met  at  n  A.  M.,  and 
adjourned  at  12.  Each  broker  carried  a  small 
book  in  which  the  prices  current  and  transactions 
of  the  day  were  recorded.  There  was  but  little  to 
record;  a  few  shares  of  bank  stock  and  a  few  insur- 
ance stocks  were  the  securities  dealt  in.  Railroads 
were  not  then  invented. 

At  what  was  then  No.  42  Wall  Street  were  the 
offices  of  Prime,  Ward  &  Sands,  afterwards 
Prime,  Ward  &  King  ;  John  Ward  and  Co.,  Ver. 
milye  &  Co.,  Nevins  &  Townsend,  and  others. 
Time  was  not  as  valuable  as  now,  and  instead  of 
the  short,  jerky  cry  of  "  a  thousand  more,"  and 
"  take  'em,"  as  is  uttered  at  present  in  the  height 
of  business  a  hundred  times  a  minute,  Mr.  King, 
perhaps,  would  appear  on  the  steps  of  his  office 


SPECULATION.  15 

with  deliberation  and  dignity  announce  that  he 
had  some  United  States  Bank  stock  to  sell,  nam- 
ing the  number  of  shares  and  price.  A  few  words 
of  consultation  among  the  crowd  of  half  a  dozen 
listeners  and  an  offer  would  be  made,  somewhat 
in  these  terms  :  "  Mr.  King,  we  understand  the 
price  named  to  be  the  lowest  acceptable,  sir." 
To  which  Mr.  King  would  reply  :  "  The  very  low- 
est, sir."  "  In  that  case  we  will  take  the  lot,  sir, 
at  the  pleasure  of  the  buyer  in  three  days,"  and 
the  transaction  was  concluded. 

Mr.  Samuel  Ward  was  the  father  of  the  late 
Sam  Ward,  the  disciple  of  Savarin,  the  poet,  the 
uncle  of  Marion  Crawford,  the  "  Roi  du  Vesti- 
bule," as  Blaine  called  him.  Sam  Ward  was 
educated  abroad,  and  was  thought  to  possess 
extraordinary  ability  as  a  mathematician.  On  his 
return  from  Europe  he  was  taken  as  a  partner  in 
the  house  of  Prime,  Ward  &  King,  and  an  amus- 
ing anecdote  was  told  as  illustrating  his  ignorance 
of  Wall  Street  matters.  He  entered  the  office  of 
a  prominent  broker  and  asked  what  the  effect 
would  be  of  a  purchase  of  20,000  shares  of  a  cer- 
tain stock,  and  was  told  it  would  be  to  advance 
the  price  several  per  cent.  Then  said  Mr.  Ward : 
"  You  may  buy  for  me  20,000  shares  and  sell 
them  out  again  at  the  advance,  sending  me  your 
check  for  my  profit,"  ignoring  the  fact  that  as 
buying  would  advance,  so  selling  would  depress 


I 6  STOCK 

the  price,  and  other  things  being  equal,  no  profit 
accrued. 

One  of  the  prominent  old  time  brokers  was  Mr. 
William  H.  Hayes,  who  afterwards  became  Presi- 
dent of  the  Bank  of  the  State  of  New  York.  His 
father,  Jacob  Hayes,  was  famous  as  the  first,  last 
and  only  Lord  High  Constable  of  the  City  of  New 
York,  who,  befqre  the  time  of  Police  Commission- 
ers, Captains  and  Patrolmen,  ruled  the  disorderly 
elements  of  the  city. 

The  Stock  Exchange  had  various  abiding  places 
until  it  located  permanently  in  its  present  quar- 
ters. At  first  it  transacted  its  business  on  the 
sidewalk,  then  in  rooms  over  a  stable,  and  from 
there  moved  into  the  old  Warren  Building.  In 
1842  it  became  located  in  the  rotunda  of  the 
Merchants'  Exchange,  which  is  now  the  Custom 
House.  It  remained  there  until  between  1850 
and  i860,  when  it  removed  into  Exchange  Place, 
and  from  there  to  William    Street. 

In  1879  tne  Exchange  purchased  the  premises 
which  it  now  occupies  on  New  Street  and  erected 
the  present  board-room  building,  which  has  a 
frontage  of  150  feet  on  New  Street.  The  cost  of 
the  lots  was  $375,000  and  included  a  strip  run- 
ning through  to  Broad  Street  90  feet  wide  and  170 
feet  deep  through  the  block. 

Boston,  Philadelphia  and  Baltimore  each  have 
their  Stock  Exchanges,  but  the  business  done  in 
them  bears  ho  comparison,  in   volume  and  mag- 


SPECULATION.  17 

nitude,  to  that  done  in  the  great  whirlpool  of 
Gotham. 

A  smart  sharp-witted  young  man,  who  can  but 
just  command  the  means  to  buy  a  seat  in  the 
Exchange,  is  in  luck.  His  seat  is  a  fortune  in 
itself.  Possessing  a  seat  he  can  form  a  partner- 
ship with  some  man  who  can  furnish  all  the  money 
needed  to  found  a  commission  brokerage  busi- 
ness, on  a  basis  of  a  division  of  the  profits.  The 
broker's  membership  is  an  offset  against  his  part- 
ner's capital.  The  latter  is  the  banker,  who  runs 
the  office,  while  the  broker  is  on  the  floor  of  the 
Exchange  to  receive  and  execute  orders  sent  to 
him. 

Large  capitalists  and  speculative  railway  direc- 
tors, who  deal  in  stocks  by  the  tens  of  thousands 
of  shares,  buy  seats  solely  for  the  immense  saving 
in  brokerage  commissions.  As  brokers  them- 
selves, they  can  have  their  orders  executed  by 
other  brokers  for  from  $2  to  $4  to  buy  or  sell  100 
shares,  where  as  outsiders  they  would  have  to  pay 
$12.50,  or  $25  on  each  turn  in  100  shares. 

Hazing  is  practiced  on  the  admission  of  new 
members.  On  his  first  entrance  to  the  board 
room  he  will  be  set  upon,  his  $10  silk  hat  may  be 
knocked  off  and  kicked  into  complete  collapse  ; 
his  $40  coat  may  be  torn  down  the  back ;  he  will 
be  lucky  if  the  seat  of  his  breeches  don't  give  way 
in  the  melee  :  he  may  be  hoisted  on  a  table  and 
spun  around  on  his  sit-down  until  drunk  with  con- 
3 


1 8  STOCK 

fusion  ;  he  may  be  thrown  to  the  floor,  back  up, 
while  some  rollicking  broker  grabs  his  ankles  like 
the  handles  of  a  wheelbarrow,  and  makes  him  pad- 
dle around  the  room  on  his  hands.  He  will  final- 
ly make  his  escape  looking  as  though  he  had  been 
through  a  cage  of  wild  animals.  From  thenceforth 
he  will  be  treated  as  a  full  fledged  member,  and  will 
doubtless  take  a  hand  in  putting  the  next  fellow 
through  the  mill. 

The  personnel  of  the  Exchange  are  a  splendid 
lot  of  fellows,  so  debonair,  with  a  chic  and  esprit 
de  corps  scarcely  matched  by  any  other  class  of 
business  men  anywhere.  They  are  bon-vivants  in 
high  living  ;  connoisseurs  in  wines,  generally  good 
looking,  dressed  in  the  latest  fashion,  quick,  keen- 
witted in  a  trade  or  to  see  the  point  of  a  joke. 
Jolly,  frisky  and  sportive  as  so  many  colts,  they 
are  willing  to  pay  a  good  price  for  their  fun.  One 
time  an  organ  grinder,  his  wife  and  baby  were  look- 
ing in  through  the  New  Street  door.  They  were 
seized  on  and  dragged  into  the  room  greatly  to 
their  terror.  One  broker  took  the  organ  and 
ground  out  the  music,  another  took  the  baby  and 
showed  it  around,  a  third  passed  around  his  hat. 
When  the  fun  was  over,  organ  and  baby  were  re- 
stored and  the  hat  emptied  of  about  $45  into  the 
hands  of  the  lately  demoralized  Italians,  who  left 
grinning  all  over  at  their  good  luck.  Sometimes 
fun  will  be  made  of  people  in  the  gallery,  and  once 
in  awhile  the  brokers  get  overmatched  in  an  unex- 


SPECULATION.  19 

pected  quarter,  and  their  fun  recoils  like  a  boomer- 
ang. A  spruce-looking  darkey  leaned  over  the 
gallery  rail  one  afternoon  viewing  the  crowd  below. 
Some  of  the  members  on  the  floor  below  spied 
him  and  yelled,  "  Yah  !  yah  !  "  and  began  singing, 
"  Hoe  dat  Corn."  The  darkey  nodded  approval, 
and  fishing  a  nickel  from  his  pocket,  tossed  it 
down  to  them.  The  singers'  voices  were  stilled 
and  the  rest  of  the  crowd  on  the  floor  howled. 

Brokers  are  of  all  classes.  Sunday-school  super- 
intendents, teachers,  exhorters,  deacons,  church 
wardens,  laymen,  society  dilettante  and  gam- 
blers. 

Originally  Stock  Exchanges  were  organized  to 
make  a  market  to  distribute  public  securities 
among  the  people  by  absolute  purchase  and  sale. 
On  first  principles  they  were  a  power  for  good  in 
promoting  great  public  enterprises,  in  opening  up 
new  regions  for  settlement,  in  developing  the  re- 
sources of  the  country,  and  in  aiding  to  provide 
new  sources  of  industry  in  the  building  of  rail- 
roads, canals,  steamships,  and  in  bringing  to  the 
surface,  for  public  use,  the  mineral  wealth  of  gold, 
silver,  copper,  iron  and  coal. 

Ostensibly  the  rules  of  the  Exchange  hedge 
around  its  members  a  rigid  code  of  honor  and  a 
high  standard  of  commercial  excellence  against 
sharp  practices  or  unfair  advantage  between  brok- 
ers, or  brokers  and  customers.  With  the  increase 
of  membership  and  the  enormous  growth  of  busi- 


20  STOCK 

ness,  abuses  crept  in,  in  stock  deals  on  margins,  in 
short  sales  of  what  one  does  not  own  and  has  no 
moral  right  to  sell,  in  stock  watering,  stock  wash- 
ing and  the  whole  train  of  evils,  which,  for  many- 
years,  have  made  the  New  York  Stock  Exchange, 
in  very  truth,  the  greatest  gambling  hell  in 
America. 

All  brokers  are  not  room  traders  and  dissemin- 
ators of  fictions  to  mislead.  Many  are  bulls  from 
principle,  first,  last  and  all  the  time.  They  are 
there,  however,  to  make  money,  and  will  execute 
orders  to  sell  short  stock  as  readily  as  to  buy  for 
the  long  account.  They  leave  the  morality  of  the 
thing  to  the  conscience  of  their  customers. 

A  class  of  them  are  millionaire  bankers,  brokers, 
room  traders,  operators  and  manipulators  of  the 
market  all  rolled  into  one.  They  inflate  or  depress 
values.  They  give  out  false  pointers  to  rope  in 
innocent  people.  They  resort  to  tricks  that  would 
out  Herod  Mephistopheles  and  fictions  that  would 
discount  Gulliver  and  Baron  Munchausen.  They 
inflate  values  only  to  sell  out  at  the  top  to  the 
suckers  they  can  draw  into  their  net.  They  go 
short  and  improvise  fierce  raids  to  destroy  values 
by  bidding  down  prices  on  washes.  They  doubt- 
less subsidize  the  rumor  mills,  to  fill  the  minds  of 
their  victims  with  fear  and  distrust,  that  prices 
have  no  bottom,  and  induce  them  to  throw  over 
their  stocks  through  terror  of  greater  losses. 

Often  almost  the  whole  class  of  brokers  are  used 


SPECULATION.  21 

as  the  tools  to  promote  the  same  business  methods, 
and  through  whom  the  same  ends  are  attained  by 
unscrupulous,  powerful  and  ruthless  outside  capi- 
talists. 

On  the  grand  theatre  of  the  world  nations  fight 
battles  on  the  gory  field  of  Mars.  Parties  wage 
contests  in  the  bloodless  realms  of  politics,  with 
the  axiom  that "  to  the  victors  belong  the  spoils." 
As  it  was  in  the  Trojan  war,  for  the  possession  of 
a  voluptuous  woman,  just  so  it  is  in  the  arena  of 
speculative  finance  for  the  almighty  dollar.  It  is 
on  the  principle  that  they  who  can  win  by  strata- 
gem and  superior  craft  are  entitled  to  the  booty. 

A  modern  poet,  with  the  rich  imagery  of  a 
Homer,  would  find  an  unlimited  field  for  imagina- 
tive fancy  in  an  epic  depicting  the  battles  between 
the  bulls  and  the  bears.  The  great  capitalists  and 
manipulators  of  the  stock  market  and  their  follow- 
ing, as  bull  and  bear  heroes,  would  offset  Achilles, 
Patroclus,  Ajax  and  the  Myrmidon  bands  against 
great  Hector,  Sarpedon,  ^Eneas  and  the  Trojan 
hosts.  Figuratively,  the  flash  of  the  electric  light- 
ning over  telegraph  and  telephone  wires  with  news 
of  good  or  evil  omen  would  be  the  descent  of  Juno, 
Minerva  and  Pallas  like  meteors  from  Olympus 
with  commands  from  Jove  to  turn  the  financial 
scale  for  bull  to  drag  bear  or  bear  to  drag  bull  at 
the  tail  of  his  chariot. 


STOCK 


"WALL  STREET'S  LAMB. 

Wall  Street  had  a  little  Lamb, 

It's  fleece  was  very  thick  ; 
At  every  turn  the  market  took 

The  Lamb  was  sure  to  stick. 

It  followed  up  and  followed  down 

With  every  rise  and  fall, 
Preferring  to  be  done  quite  brown 

Rather  than  not  at  all. 

The  eager  brokers  cleaned  him  out, 

But  still  he  lingered  near, 
And  waited  patiently  about 

To  get  his  margins  clear. 

The  brokers  got  them,  clear  and  clean, 

For  they  were  "  out  of  meat ;  " 
But  still  he  waited,  starved  and  lean, 

And  hung  about  "  the  street." 

' '  What  makes  the  Lamb'  love  Wall  Street  so  ? '' 

The  curious  rounders  cry. 
Why,  Wall  Street  loves  the  Lamb,  you  know, 

And  wool  is  scarce  and  high.  " 


SPECULA  TION.  23 


CHAPTER  III. 

TYPICAL  BANKERS  AND   BROKERS. 

YOUR  true  banker  is  one  who  conducts  the 
operations  of  National,  State  and  savings 
banks,  and  guards  the  money  you  have  deposited 
with  him  with  the  fidelity  of  a  bull  dog.  We  are 
not  treating  of  this  class  in  this  chapter. 

It  is  the  bastard  bankers  who  furnish  facilities 
for  gambling  operations  on  margins  and  who 
make  their  profits  out  of  commissions,  interest 
and  shaves.     They  are  the  class  we  mean. 

Usually  their  names  stand  more  or  less  high  on 
'Change,  for  they  have  money,  and  "  money  makes 
the  mare  go  "  everywhere.  In  Wall  Street,  of  all 
places,  <:  nothing  succeeds  like  success." 

In  true  legitimate  business  every  one  gets,  or 
expects  to  get,  value  for  value  given.  Too  often 
these  bankers  influence  and  lead  customers  into 
ventures  for  the  mere  sake  of  gain  to  themselves. 

Customers  put  up  money  and  go  in.  If  they 
make  a  profit,  they  win  a  bet  for  which  they  give 
no  value  to  the  other  fellow.  If  they  lose,  the 
other  fellow  gets  a  value  for  which  he  gives  no 
equivalent.  Win  or  lose,  the  bankers  get  their 
commissions  and  interest,  and  too  often  the  cus- 
tomers have  nothing  to  show  in  return.     All  this 


24  STOCK 

is  contrary  to  Divine  law  to  give  full  value  for 
value  received. 

In  Wall  Street,  with  the  exception  of  interest 
on  railway  bonds  and  dividends  on  investment 
stocks,  every  dollar  made  in  speculation  is  made 
by  one  man,  or  set  of  men,  at  the  loss  of  some 
other  man  or  set  of  men. 

It  is  out  of  this  business  that  the  commission 
bankers  wax  fat  and  grow  rich  at  the  expense  of 
their  victims.  Morally  there  is  no  difference 
whether  one  makes  his  commissions  on  a  stock 
gamble,  or  on  pool  selling  at  a  horse-race. 

In  stock  transactions  at  least  ninety  per  cent, 
of  all  the  deals  are  on  margins.  It  is  the  same  in 
oil,  grain,  provisions  and  cotton  futures. 

Stock  bankers  and  brokers  have  their  offices  on 
Exchange  Place,  on  Nassau,  Broad,  Wall,  Broad- 
way and  New  Streets.  Some  have  branch  offices 
up  town  in  or  near  the  great  hotels,  or  in  other 
cities  more  or  less  distant,  all  connected  with  the 
down  town  offices  by  private  wires. 

Some  of  the  most  powerful  men  in  the  market 
had  their  offices  on  Broadway  overlooking  Trinity 
Churchyard,  so  quiet — so  beautiful.  "  Only  man 
is  vile."  But  "  dead  men  tell  no  tales  "  of  the  sharp 
practices  of  the  conscienceless  money  sharks. 

The  offices  are  often  fitted  up  with  elegant 
opulence.  Rich  carpets,  rugs,  soft  luxurious  fur- 
niture, tickers,  news  tape,  price  lists,  stock  manu- 
als, the  City  Directory  and  the  commercial  agency 


SPECULA  TION.  25 

books  of  R.  G.  Dun  &  Co.  and  Bradstreet,  and  the 
financial  publications,  greet  the  eye. 

Everything  is  inviting.  "  Walk  into  my  parlor, 
says  the  spider  to  the  fly."  The  bankers  are  all 
smiles.  Their  hands  and  voices  are  soft  and  purr- 
ing.    Their  politeness  is  of  the  kid-glove  order. 

What  can  we  do  for  you  to-day,  Mr,  Fitz- 
noodle  ? 

We  have  the  point  that  moonshine  stock  is 
good  for  a  big  rise.  We  advise  buying  that  for 
a  turn.  We  can  buy  you  100  shares  for  each 
$1,000  margin  you  put  up.  Our  commissions  are 
one-eighth  to  buy,  one-eighth  to  sell,  only  $25  on 
each  turn  of  100  shares.  The  interest  to  "carry" 
won't  amount  to  much.  One  of  our  customers 
made  a  two  per  cent,  profit  yesterday  in  twenty 
minutes.     Did  you  ever  make  money  like  that  ? 

Your  order.  Yes,  ah,  thanks  !  Make  yourself 
at  home.  All  the  conveniences  of  our  orifice  are  at 
your  disposal.  In  effect,  the  talk  is  often  about 
as  above,  with  variations,  sometimes  more  so. 

So  Fitz  becomes  a  tape  speculator  and  hanger 
on  of  the  office.  Small  successes  soon  lead  to  in- 
fatuation. If  a  gain  of  one  or  two  points  appears, 
the  banker  or  an  office  attendant  will  admonish 
him  :  "  Always  take  profits  in  sight."  So  Fitz  is 
got  out  only  to  be  got  in  again. 

How  disinterested  (?),  but  inwardly  the  banker 
chuckles.  He  has  made  $25  commissions  on  a 
turn  in  100  shares,  or  $250  on  a  turn  in  1,000 
shares,  as  the  case  may  be.     With  plenty  of  cus- 


26  STOCK 

tomers  the  bankers  make  money  as  slick  as  grease. 
No  risks  and  losses  to  them. 

Chilling  frosts  fill  Fitz  with  fear,  but  if  he  is  a 
fat  gander  to  pick,  the  banker  or  his  clerks  will 
encourage  him.  "  We  never  advise  to  take  a  loss, 
stocks  go  up  and  stocks  go  down  ;  hold  on,  the 
market  will  turn  and  you  will  come  out  all  right !" 
The  banker  don't  know  his  own  head  from  his 
tail,  how  the  bug  will  jump. 

If  stocks  go  down  to  within  two  or  three  per 
cent,  of  exhausting  his  margin,  Fitz  will  get  a  hint 
to  put  up  more  money ;  failing  to  do  that  the 
banker  will  take  precious  good  care  to  close  him 
out  in  time  to  save  his  commissions  and  interest. 

In  the  great  depression  of  1883-4,  when  stocks 
had  a  fall  of  from  30  to  100  per  cent.,  some  bank- 
ers were  opinionated  bulls  all  through  it.  Their 
advice  was,  "  Hold  on,  the  market  will  turn  and 
you  will  come  out  all  right." 

Such  advice,  while  valuable  in  a  moderately 
fluctuating  market,  was  ruin  to  those  who  followed 
their  lead  through  the  great  bear  raids  and  the 
long  depression. 

Take  Union  Pacific  stock  as  an  illustration.  In 
1882  its  highest  price  was  119!.  In  1883  its 
highest  was  104!-  In  1884  its  highest  was  84!, 
and  its  lowest  price  was  $28  per  share.  Many 
other  stocks  declined  in  the  same  ratio. 

In  such  a  time  the  true  policy  was  to  "  run," 
and  run  quickly.     In  some  instances  bull  houses 


SPECULATION.  27 

themselves  went  down  in  the  crash,  and  custom- 
ers by  hundreds  and  thousands  were  carried  under 
through  their  leadership. 

It  was  the  bear  houses  and  their  pessimist  cus- 
tomers who  made  money  out  of  the  misplaced 
confidence  of  the  optimists. 

Bankers  and  brokers  are  there  to  make  money. 
They  do  not  cheat  or  rob  a  Voutrance.  But  they 
do  get  into  their  customers  all  the  same,  for  com- 
missions through  the  damnable  influences  they 
exert. 

With  all  their  soft  ways  and  smooth  palaver, 
more  or  less  of  them  are  wolves  in  sheep's  cloth- 
ing. Many  are  adepts  in  the  role  of  good  Lord, 
good  devil,  and  hard  drinkers,  out  of  business 
hours. 

Their  chief  god  is  Mammon.  In  the  time  of 
Aaron  they  would  have  bowed  down  in  worship 
of  the  "  Golden  Calf,"  in  hopes  of  getting  away 
with  it  to  melt  up  into  shekels. 

Many  have  been  in  the  business  from  twenty 
to  fifty  years.  In  that  time  what  multitudes  of 
victims  have  been  lured  into  their  nets  and  dragged 
down  from  comfort  to  penury  ! 

Not  a  few  are  worth  from  half  a  million  to  mil- 
lions of  dollars,  still  their  greed  is  unsatisfied. 
Some  advertise  widely  (in  effect)  for  new  victims 
to  come  to  the  shambles  for  the  periodical  sheep 
shearings. 

Often,  often  their  customers  are  cast  in  losses 


28  STOCK 

of  hundreds  and  thousands  of  dollars  on  each  ioo 
shares,  but  that  does  not  signify  to  these  soft- 
voiced,  smooth-purring  and  polite  rogues. 

Banker-brokers  value  investors  in  the  dividend 
payers,  according  to  the  extent  of  their  pur- 
chases, but  these  buy  for  the  income  and  only 
bring  grist  to  their  mills  at  long  intervals.  Far 
above  them  the  brokers  value  the  margin  custom- 
ers, whom  they  can  manipulate  in  and  out,  and 
milk  for  frequent  commissions  and  interest  on 
stocks  they  carry  for  them. 

Commissions  are  not  the  only  perquisites  to  the 
stock  houses,  for,  in  times  when  money  is  a  drug, 
they  can  borrow  at  from  I  to  4  per  cent,  to  carry 
stocks  for  customers,  and  charge  them  6  per  cent., 
pocketing  the  difference  as  profit.  They  have 
other  opportunities  to  make  money  on  loaning 
rates  and  for  voting  rights  when  customers  are 
napping. 

No  gambling  system  was  ever  more  cunningly 
devised  to  mulct  the  unwary  than  that  of  the 
stock  market.  The  bankers  know  this.  Still  they 
reach  out  for  new  fish  to  their  net,  like  the  ten- 
tacles of  an  octopus  ;  still  they  bait  the  hook  for 
new  victims,  and  paint  bright  argosies  of  good 
things  to  come  on  the  wings  of  ^Eolus. 

Customers  by  the  hundreds  and  thousands  have 
revolved  around  the  outer  circles  of  the  mael- 
strom, and  many  of  them  have  disappeared  to 
penury  in  the  vortex.     Still  the  evanescent  mi- 


SPECULA  TION.  29 

rage  of  wealth  is  held  out  and  the  same  damnable 
influences  are  brought  to  bear  to  get  people  in 
and  out  for  those  fat  little  plums  of  $25  on  a  turn 
in  each  100  shares. 

Bankers  and  brokers  all  know  that  the  concomi- 
tants of  speculative  finance  are  jugglery,  leger- 
demain, adroit  trickery,  wheels  within  wheels, 
marked  cards,  loaded  dice,  secret  manipulation, 
false  pretenses,  unfounded  rumors  of  great  good 
or  dire  misfortune — that  it  is  a  deception  by  those 
who  make  and  unmake  the  market,  which  in  al- 
most any  other  business  would  bring  its  perpetra- 
tors within  the  pale  of  criminal  law.  Yet  they  are, 
to  all  intents  and  purposes,  ropers-in  and  stool 
pigeons  to  the  oligarchy  of  millionaire  commer- 
cial gamblers,  who  concoct*  ever-recurring  Emma 
Mine,  Credit  Mobilier,  and  other  schemes,  to  al- 
lure the  public,  and  eventually  scoop  the  inno- 
cents by  practices  on  a  par  with  the  methods  of 
the  bunco  steerer  and  the  sawdust  swindler. 

Were  this  villainous  system  of  purchases  on 
margins,  and  short  selling  of  other  people's  prop- 
perty  squelched  by  law,  such  practices  could  not 
obtain.  This  whole  species  of  gambling,  both  at 
the  exchanges  and  the  bucket  shops,  would  be 
wiped  out. 

Millionaires  and  capitalists,  who  could  afford  to 
pay  for  their  stocks,  would  be  left  to  prey  upon 
each  other,  and  it  would  be  "dog  eat  dog"  be- 
tween them. 


3°  STOCK 

Enormous  fortunes  of  tens  and  hundreds  of 
millions  could  not  be  rolled  up  in  a  decade  by 
practices  which  are  nothing  short  of  a  species  of 
robbery. 

As  it  is,  the  bankers'  and  brokers'  offices,  al- 
most without  exception,  offer  unlimited  facilities 
for  margin  gambling  in  long  or  short  stock.  The 
masses  are  lured  in,  and  the  few  hundred  or  few 
thousand  dollars  they  possess  is  all  risked  on  a 
game  of  chance,  and  a  very  one-sided  game  at 
that. 

In  the  bucket  shops  the  deals  are  anywhere 
from  5  shares  to  1,000  shares  at  a  single  quotation 
on  a  one  per  cent,  margin  or  upwards. 

Within  the  past  year  or  so  the  legal  authorities 
and  the  police  of  New  York  and  Brooklyn  have 
been  stirred  to  unwonted  activity  in  breaking  up 
pool  selling  on  horse  races,  in  closing  policy  shops, 
faro,  roulette  and  other  gambling  dens. 

Put  all  the  race  courses  in  the  United  States 
together,  then  add  to  them  all  the  gambling  dens 
where  poker,  dice,  faro,  and  similar  games  of 
chance  are  played  for  money,  the  sum  total  of 
losses  and  demoralization  they  inflicted  would 
scarcely  equal  those  entailed  by  margin  gambling 
in  railway  and  mining  stocks,  in  oil,  grain,  pro- 
visions and  cotton,  in  the  exchanges  and  bucket 
shops  at  New  York,  Boston,  Philadelphia,  Balti- 
more, Oil  City,  New  Orleans,  SanFrajicjsc^,  St. 
Louis  and  Chicago. 


SPECULATION.  31 

Lame  ducks  and  wrecks  of  this  speculative 
gambling  are  thickly  scattered  here  and  there  all 
over  New  York  and  the  neighboring  cities.  They 
are  to  be  found  in  every  State  and  in  almost  every 
county  and  town  that  has  been  opened  up  to 
settlement. 

Why,  then,  do  not  moralists  and  friends  of  hu- 
manity exert  themselves  to  enlist  right-minded 
people  to  agitate  the  matter,  and  to  demand  the 
enactment  of  laws  to  crush  out  this  monstrous 
evil  of  margin  gambling,  short  selling,  and  stock 
washing  ?    • 

State  laws  would  not  avail,  for  the  Exchanges 
could  step  over  the  line  from  one  State  into  an- 
other, and  "go  on  with  the  dance." 

What  is  wanted  is  the  strong  arm  of  National 
law,  enforced  all  over  the  Union,  to  estop  margin 
gambling.  And  thumb-screw,  star-chamber,  in- 
quisition State  laws  to  take  the  high  priests  of  the 
great  god  Mammon  by  the  throat  and  make  them 
pay  their  just  share  of  the  taxable  burdens  of  the 
people. 

This  is  the  true  antidote  against  the  spread  of 
socialism,  communism  and  anarchy,  which  is  even 
now  approaching  the  bloody  horrors  of  a  revolu- 
tion. 

The  "  Knights  of  Labor,"  as  a  body,  are  neither 
socialists,  communists  or  anarchists,  but,  all  the 
same,  the  inevitable  progress  of  events  is  in  that 
direction,  and  the  reasons  are  obvious. 


32  STOCK 

In  France,  under  a  profligate  monarchy,  the 
higher  classes  had  many  privileges  which  were 
denied  to  other  subjects,  especially  their  exemp- 
tion from  taxes.  Common  people  were  despised 
and  yet  made  to  bear  all  the  burdens  and  expenses 
of  the  State. 

Louis  XVI.,  wishing  to  rectify  this  condition  of 
affairs,  and  restore  the  disordered  state  of  the  fin- 
ances, convoked  the  Notables,  a  body  selected 
from  the  higher  orders.  To  them  it  was  proposed 
to  lay  a  land  tax,  proportioned  to  property,  with- 
out any  exemption.  This  the  Notables  refused 
to  sanction. 

These  things  and  other  causes  gave  rise  to  the 
Jacobins,  and  culminated  in  a  revolutionary  tri- 
bunal under  Marat  and  Robespierre. 

In  the  "  Reign  of  Terror  "  which  followed,  the 
king,  the  queen,  and  many  of  the  nobility  were 
brought  to  death  by  the  guillotine,  and  the  blood 
of  thousands  on  thousands  of  victims  flowed  in 
every  part  of  France. 

Formerly  the  rich  and  powerful  kept  the  poor 
in  subjection  by  means  of  the  military  arm.  A 
large  portion  of  the  people  of  Russia  were  serfs — 
slaves  of  the  nobles.  Even  at  home,  until  the  late 
civil  war,  there  were  millions  of  people  in  slavery. 

The  uneducated  were  at  the  mercy  of  men  of 
superior  ability,  and  in  this  way  the  few  have 
been  able  to  control  the  many. 

The  march  of  events  within  recent  years   has 


SPECULA  TION.  33 

been  rapid  towards  the  material  improvement  and 
elevation  of  the  laboring  classes. 

Money,  everywhere,  has  a  tendency  to  concen- 
trate itself  in  a  few  hands.  Capitalists  form  cor- 
porations to  work  coal  and  iron  mines,  to  build 
factories,  railroads,  steamships,  telegraph  lines, 
etc.  They  operate  to  secure  the  largest  amount 
of  profit  at  the  least  possible  cost.  They  exact 
the  largest  number  of  hours  of  work  for  the  least 
amount  of  wages. 

Education  and  a  free  press  has  taught  laborers 
their  rights,  and  that  they  can  enforce  their  rights 
by  combining  together  in  societies.  Hence  they 
have  their  local  district  assemblies  all  over  the 
Union  and  a  National  Assembly  presided  over 
by  a  General  Master  Workman. 

Poor  people  generally  pay  no  direct  tax ;  indi- 
rectly they  pay  a  grinding  tax  in  increased  rents, 
and  in  the  enhanced  cost  of  all  the  necessaries  of 
life. 

Of  all  combinations  of  capital,  speculative 
monopoly  in  Wall  Street  is  the  worst.  Untold 
millions  of  dollars  are  filched  from  the  people  year 
after  year,  by  trickery  and  artifice,  to  the  enrich- 
ment of  private  individuals.  Hundreds  of  mil- 
lions in  railway  bonds  and  other  taxable  personal 
property  is  kept  covered  up  and  concealed  from 
assessment.  The  burden  of  taxation  is  thrown  on 
real  estate,  and  the  landlords  in  turn  throw  it  on 
the  shoulders  of  their  tenants  in  increased  rents. 
4 


34  STOCK 


CHAPTER  IV. 

COLLAPSE   OF   A    BULL    MARKET. 

FROM  1880  to  1882  the  stock  market  had  had 
a  big  rise.     Speculation  ran  riot. 

The  outside  public  were  in  and  biting  at  the 
bait  eagerly. 

Prices  fluctuated  up  on  purchases,  down  on 
realizations  like  the  billows  of  the  ocean,  now 
down  in  the  trough  of  the  sea,  now  up  on  the 
crest  of  the  waves. 

The  outside  adventurer  and  alert  trader  could 
catch  on  and  snatch  frequent  profits  that  turned 
his  head,  and  lead  to  reckless  infatuation. 

Then  came  the  collapse  and  the  savage  raids  of 
the  bears  to  destroy  values.  The  insiders  had 
sold  out  and  gone  heavily  short.  The  outside 
public  were  stranded  with  stocks  mostly  bought 
on  margins.  They  were  left  to  get  out  as  best 
they  could,  or  to  follow  their  banker's  advice  to 
"  hold  on."  Those  who  held  on  on  weak  margins 
were  wiped  out.  Many  who  had  paid  for  their 
stocks  outright  were  so  fearfully  roasted,  that  in 
the  end  they  threw  over  their  holdings,  in  terror, 
at  enormous  losses.     The  following-  table  shows 


SPECULA  TION. 


35 


the  highest  and  lowest  prices  of  the  leading  active 
stocks  for  the  years  1 88 1-2,  and  1883-4: 


j    N    «nin  CM3Q  ><     OO  Ln  (M  CO    pi 

iM  '  I  II  I  I  T  I  T I  I  I  !  I  1  1 

I     k/Hco      wk^isj  r-wHx.-c|"t>o|or>H^.-o|Tt.n|ci>H|^-i|(N 


IX 


I 


1^00   t-i   -1  w  urt  n  n  h  r^r^-o    O  cm   en  o  O  r-^  o 
rj-vo  OOi-ii-icO>-iMNMOrJ-MMC<^-CaMOO 

^ !  1  11 T  T  T  T  T 1  1  11  iT  1  1  1  1  I 

'   •-  Ococo  cm  o  cnw  ow  u-)^co  -r  o  co  o  o  c<->  -t 
r-»  O^co   O  K    tmnN  m^H   mtow   "^  Oco   rf  O 


-*NeO|00         CC|M<0|'* 


I        I        M        I        I        I        I        I        I        M        I        I        I        I        I        I        I 

KxHaHtHtwI-tf       H*      "JlcoHiNnlowsk— i|<n      eo|»w|eo«|'0"0|o(«o|n 


•"♦N-^MHoeol^      Hco      col-*       H"  Hows|oow|^Hoo 

O   cm   O   -i  O   r-~  -i   r^o  Ococo    O  -t  »r>  cm   t*-  -3- 
moo  00  o  "  h  no  no  C)m  htnn  coo  o  ^  O 


I  J 

I    *>o 


II  I  I  II  I  I  I  I  I  I 

cm  cm    oao  O   r-^  O  cm   coO   mO 
O   cm   ci  to  i-  M  on   m   O 


I  I  I  Ml  J 

O  t^w^o  nno 
oh  win  moo  co  r-~  en 


.S   « 

__    O 


§C    c 


C     ^      r-1  -         *-> 

<*  «  c  ~    £ 


aj      " 

X      • 

•    •  u    : 

:i>H    : 

:r£«2    : 

:-5  S    : 

!fc    S   8 

:  c 

a  0 

CJO  O  , 
G  xl : 
'3  W 


t:  g 


PQJ 


o  a 


50 


a  o 
x  -2 


OHI3 


A  CONSCIENTIOUS  BROKER. 

This  particular  broker  was  a  gentleman  and  a 
very  honorable  man,  considering  his  business.  He 
was  not  mercenary  like  his  partner,   the   banker. 


36  STOCK 

The  banker  was  ravenous  for  commissions.  To 
him  everything  was  good  for  somebody  else  to 
buy  or  sell,  if  it  brought  grist  to  him.  But  he 
took  no  risks  to  buy  or  sell  for  himself.     Not  he  ! 

Often,  often  this  broker  held  his  customers  out 
of  ventures  that  his  banker  partner  advised  them 
into.  Many  losses  were  thus  averted  at  the  ex- 
pense of  loss  of  commissions  to  the  stock  house. 

The  broker,  while  not  advising  purchases  at  any 
and  all  times,  was  a  bull  on  principle.  He  never 
liked  the  bear  side  of  the  market.  But  it  was  his 
business  to  execute  orders  whether  for  the  long 
or  short  account,  and  he  did  it. 

The  market  had  had  a  long  run  of  prosperity. 
He  had  great  faith  in  the  soundness  and  stability 
of  values  of  the  Granger  and  Pacific  stocks,  espe- 
cially in  the  "  Villards."  Many  of  the  sharpest 
and  shrewdest  business  men  in  New  York  pinned 
their  faith  to  them  and  backed  it  up  with  their 
money. 

When  the  bears  began  their  raids  on  the  Pacific 
stocks,  and  exposed  the  existing  rottenness  in 
these  corporations,  these  men  could  not  and 
would  not  believe  it. 

They  held  on  through  a  decline  of  twenty, 
thirty,  forty,  or  more  per  cent.,  and  then  their 
faith  turned  to  distrust,  doubt  to  conviction,  and 
they  threw  over  their  stocks  at  losses  of  tens, 
hundreds  of  thousands  and  millions  of  dollars. 


SPE  C  ULA  TION.  3  7 

At  the  end  of  the  great  decline  and  depression 
these  victims  of  misplaced  confidence  numbered 
hundreds  of  thousands. 

The  failure,  or  suspension  of  banks  here  and 
there  all  over  the  country  exposed  bank  Presi- 
dents and  Cashiers  who  had  speculated  with,  and 
lost  the  money  of  their  depositors. 

Defaults  brought  speculative  fiduciary  agents, 
and  managers  of  business  enterprises  to  grief  and 
public  exposure. 

But  the  great  multitude  of  private  individuals 
who  slunk  out  of  "the  Street,"  crippled  or  utterly 
ruined,  were  never  heard  of  outside  the  circle  of 
their  own  family  and  friends. 

THE    BROKER    WORRIED. 

This  same  broker  before  mentioned  was  superior 
to  his  class  ;  was  above  petty  trickery ;  was  "  as 
straight  as  a  parson,"  and  really  solicitous  for  the 
success  of  his  customers. 

About  the  time  these  heavy  losses  were  accru- 
ing, in  friendly  gossip,  he  told  the  writer  he 
"wished  he  was  out  of  the  business ;  he  could  not 
sleep  thinking  of  the  misfortunes  of  his  clientele." 
He  had  a  boy  just  entering  manhood,  "  he  would 
not  have  him  become  a  broker."  "  If  he  could 
hit  the  market  three  times  out  of  five  he  would 
not  be  there  acting  as  the  agent  of  anybody  but 
himself."  At  another  time  he  talked  of  "  going 
out  of  the  business  the  next  spring,"  the  results 


38  STOCK 

to  customers  of  the  house  had  been  so  disastrous. 
Not  unfrequently  he  would  dissuade  customers 
from  ventures,  and  if  the  orders  were  insisted  on, 
he  would  execute  them  with  fear  as  to  the  result. 

Some  of  his  customers  were  bears  on  general 
principles ;  if  they  got  caught  in  a  corner  and  had 
to  pay  a  loaning  rate  of  say  $400  for  one  day's 
loan  of  100  shares  of  stock,  he  would  denounce 
the  manipulators  of  the  squeeze  as  "  thieves  and 
robbers." 

He  is  a  broker  still,  and  on  being  asked  why  he 
did  not  go  out  of  business  as  he  expected  to,  he 
replied  :  "  I  cannot  help  it,  I  have  no  other  occu- 
pation." 


SPECULA  TION. .  39 


CHAPTER  V. 

MANIPULATING  BANKER-BROKERS. 

GENERALLY  they  are  men  with  large  capital. 
On  occasion  they  can  form  a  "  combine " 
with  other  capitalists  and  millionaires,  and  make 
up  a  pool  of  fifty  or  a  hundred  million  dollars  to 
boom  the  market. 

Such  combinations  are  all  powerful.  They  can 
advance  prices  at  their  will.  Sometimes  they 
confine  themselves  to  certain  specialties,  at  other 
times  they  include  almost  the  whole  speculative 
list. 

To  begin,  they  talk  down  prices  and  encourage 
outside  short  selling.  All  this  time  they  are 
quietly  picking  up  block  after  block  of  good  divi- 
dend-paying stocks,  as  a  basis  for  a  future  move- 
ment. 

When  prices  are  low  and  the  market  is  dull 
they  can  take  weeks  or  months  to  get  things  in 
train  for  an  advance. 

All  being  ready,  the  news  agencies  are  made  a 
factor  to  circulate  news  and  rumors  of  bull  pools 
and  a  boom  in  prices.  The  buying  through  vari- 
ous stock  houses  is  more  open  and  decided, 
prices  begin  to  mount  up  fraction  by  fraction, 
point  by  point. 


40  STOCK 

The  bears  run  to  cover  and  their  purchases  help 
on  the  advance.  At  ten  points,  or  so,  up,  prices 
may  be  allowed  to  sag  down  under  realizations. 
Things  may  remain  in  this  position  one  or  more 
weeks  to  encourage  the  bears  to  put  out  fresh 
lines  of  shorts. 

The  pools  loan  their  stocks  freely.  The  bears 
have  no  trouble  in  borrowing  from  day  to  day  to 
keep  good  their  deliveries. 

A  good  short  interest  having  been  roped  in, 
another  advance  is  started,  and  the  bears  again 
take  to  cover.  This  may  put  prices  up  1 5  or  20 
per  cent. 

The  insiders  begin  to  trade  on  their  hold- 
ings. They  sell  hundreds  or  thousands  of  shares 
at  the  top,  and  let  prices  run  off  from  two  to 
five  points.  Then  they  buy  back  their  stocks 
at  the  bottom.  They  repeat  these  manceuvers 
from  time  to  time.  Then,  perhaps,  rumors  will 
be  circulated  that  times  are  not  favorable  for 
a  further  advance,  or  that  the  "  big  men  "  are 
unloading.  Every  inducement  is  thrown  out  to 
encourage  the  bears  to  sell  short.  Stocks  are 
plenty  in  the  "  loan  crowd,"  and  can  be  had  for 
the  asking. 

A   PIRATICAL   METHOD. 

A  short  interest  of  from  one  to  three,  or  four 
hundred  thousand  shares  having  accumulated, 
loaned   stock   is    suddenly  called   in.     In   one  or 


SPECULATION.  41 

more  specialties  the  bears  can  borrow  no  stock  to 
keep  good  their  deliveries,  except  at  a  premium. 
There  is  a  corner.  The  loaning  rate  for  a  day  or 
two  may  be  one-eighth  or  $12.50  on  each  100 
shares.     The  price  of  the  stock  is  run  up. 

Timid  bears  rush  to  cover  at  a  loss.  Stubborn 
ones  hold  out  in  hopes  the  "  squeeze  "  will  pass 
over.  The  advance  in  one  or  more  stocks 
strengthens  the  whole  market,  and  the  entire  list 
goes  up  in  sympathy. 

In  the  height  of  the  squeeze  the  loaning  rate  is 
suddenly  run  up  to,  perhaps,  $400  per  day  on 
each  100  shares.  This  is  too  much  for  the  most 
obstinate  bruin.  There  is  a  bear  panic  and  they 
rush  pell-mell  to  cover.  Prices  advance  five  or 
ten  points  under  their  purchases  in  buying  in  the 
stocks  they  sold,  but  did  not  have  to  sell. 

The  bulls  are  now  unloading  at  enormous  prof- 
its, and  getting  a  big  loaning  rate  besides.  The 
bear  who  buys  stock  "  regular  "  cannot  get  his 
stock  until  the  next  day.  In  the  meantime  he 
must  borrow  to  keep  good  his  delivery.  The 
stock  he  borrows  one  day  may  be  wanted  the  next, 
and  he  must  return  it  and  get  a  loan  somewhere 
else. 

He  can  close  out  his  deal  and  avoid  the  high 
loaning  rate  for  that  day,  by  buying  "  cash  "  stock 
for  immediate  delivery  to  him.  With  this  he 
makes  his  final  delivery  and  is  free.  The  differ- 
ence in  price  between  "  cash  "  and  that    bought 


42  STOCK 

"  regular,"  is  sometimes  from  five  to  six  per  cent. 
All  these  transactions  of  borrowing  and  return- 
ing   stock   are    fixed  through    the  broker  in  the 
board  room. 

ANOTHER   PIRATICAL   METHOD. 

In  1882  Oregon  Trans-Continental  stock  reached 
its  highest  apex,  98 j.  Up  to  July,  1883,  it  ranged 
up  and  down  between  that  price  and  75I-.  In  the 
great  bear  raids  which  set  in  during  the  latter  part 
of  1883,  and  continued  into  1884,  the  fall  in  the 
price  of  the  "  Villard  stocks,"  viz.,  Oregon  Trans- 
Continental,  Northern  Pacific,  common  and  pre- 
ferred, and  Oregon  Railway  and  Navigation,  was 
fearful. 

One  afternoon  "  O.  T."  closed  at  about  45,  and 
opened  next  morning  at  the  same  figure.  The 
bears  had  organized  their  forces,  and  a  vigorous 
raid  set  in  against  it.  It  went  down  by  fractions, 
quarters,  halves  and  whole  points  between  quota- 
tions. 

Frightened  holders  ordered  their  brokers  to  sell 
them  out  at  market.  Down,  down  went  the  price 
until  it  reached  30.  Ten  and  fifteen  per  cent, 
margins  were  wiped  out  like  magic. 

When  suddenly,  as  if  by  the  interposition  of 
swift-winged  Mercury,  the  raid  was  stayed.  The 
bulls  flew  to  the  rescue.  Buying  orders  came  into 
the  Board  fast  and  furious.     The  bears  wavered, 


SPECULA  TION.  43 

turned  to  cover,  almost  jumped  over  each  other, 
yelling  like  demons  their  bids  to  recover  the 
stocks  they  had  sold  while  there  was  yet  a  profit. 
Up,  up  went  the  price  as  fast  as  it  had  gone 
down,  until  the  buying  fever  exhausted  itself  at 
41.  The  stock  had  a  fall  of  $15  a  share,  and  a 
recovery  of  $11,  all  within  the  short  space  of  half 
an  hour. 


44  STOCK 


CHAPTER  VI. 

SURE  POINTS — METHOD  OF  A  ROTHSCHILD — THE 
PYRAMIDS — JENA — AUSTERLITZ — MARENGO. 

NAPOLEON  I.,  by  the  prestige  of  military 
success  became  the  terror  of  Europe.  Kings 
and  potentates  trembled  at  the  magic  of  his  name. 
Financial  interests  were  fearfully  depressed. 

The  disastrous  Russian  campaign,  the  retreat 
from  Moscow,  his  troops  impeded  in  their  flight 
by  deep  snows,  decimated  by  intense  cold  and 
the  fierce  attacks  on  flank  and  rear  by  the  hardy 
Cossacks  of  the  Don  and  the  Volga,  left  him  but 
the  remnant  of  a  demoralized  army,  and  eventu- 
ally caused  his  ruin. 

Money  values  revived  for  a  time,  until  Napoleon 
raised  a  fresh  army  of  350,000  men  and  hazarded 
all  on  the  great  battle  of  Leipsic,  where  he  was 
crushed  in  the  collision  with  the  Russians,  Prus- 
sians and  Austrians. 

The  entry  of  the  allied  armies  into  Paris  caused 
the  temporary  collapse  of  the  French  empire  and 
consigned  him  to  exile  on  the  island  of  Elba. 

Then  for  a  time  confidence  was  restored.  All 
Europe  became  tranquil.  Stocks  and  government 
funds  rallied  with  buoyancy. 


SPECULA  TION.  45 

Suddenly  Napoleon  reappeared,  resumed  the 
reins  of  empire,  gathered  together  his  veteran 
troops,  and  filled  their  depleted  ranks  by  conscrip- 
tions from  every  nook  and  corner  of  France. 

All  was  excitement  and  apprehension.  Stocks 
and  consols  were  again  in  the  doldrums  in  London 
and  on  all  the  bourses  of  the  Continent. 

It  was  a  critical  time  for  England  when  Nathan 
Meyer  Rothschild,  then  head  of  the  great  London 
house  of  his  name,  secretly  crossed  over  into  Bel- 
gium, and,  on  horseback,  from  the  top  of  a  hill, 
with  a  powerful  field-glass,  watched  the  moment- 
ous events  transpiring  on  the  plain  of  Waterloo. 

Reconnoitering  just  long  enough  to  see  the 
national  colors  of  France  trailing  in  the  dust  and 
to  make  sure  that  the  lucky  star  of  Napoleon  had 
set,  he  put  spurs  to  his  horse,  rode  with  all  speed 
to  the  nearest  seaport,  hired  the  fastest  vessel  he 
could  get  to  put  him  across  the  North  Sea.  On 
the  morning  of  his  arrival  in  London  he  appeared 
in  his  usual  place  by  the  "  Rothschild  pillar,"  in 
the  temple  of  Mammon. 

Did  he  spread  the  glorious  tidings  which  would 
have  set  all  England  in  ecstasy :  the  triumph  of 
the  Royal  Standard  of  St.  George  over  the  Im- 
perial Eagles  of  France  ?  Not  he  ! 

Gloom  hung  like  a  pall  over  every  household 
from  the  palace  of  the  King  to  the  hut  of  the 
peasant.  All  awaited  with  bated  breath  for  news 
of  fateful  import. 


46  STOCK 

Crafty  as  Machiavel,  cunning  as  Tallyrand, 
Rothschild,  inwardly  chuckling,  outwardly  assum- 
ing a  serious  mien  and  gloomy  tone,  talked 
dubiously  of  the  fortunes  of  war,  while  covertly 
he  spurred  on  his  confidential  agents  to  buy  up 
all  the  stocks  and  consols  they  could  lay  their 
hands  upon. 

His  information  was  a  day  in  advance  of  the 
arrival  of  couriers  from  the  Duke  of  Wellington, 
and  when  they  did  arrive  with  the  news  of  the 
downfall  of  Napoleon  there  was  a  tremendous 
rebound,  not  only  in  public  feeling,  but  in  the 
value  of  securities,  out  of  which  this  thrifty 
knight  of  the  "  Red  Shield  "  reaped  a  harvest  of 
millions  of  pounds  sterling,  almost  in  a  trice. 

A   BOURBON    METHOD. 

Nowhere  were  the  uncertainties,  always  follow- 
ing upon  finance,  greater  than  under  the  surprises 
and  excitements  attending  and  intervening  be- 
tween the  first  and  second  French  empires. 

The  empire  was  succeeded  by  a  kingdom,  that 
by  a  revolution,  which  gave  way  to  a  new  king. 
Then  came  a  quasi-republic,  to  be  succeeded  by 
the  coup  d'etat  of  Napoleon  III. 

Among  so  mercurial  a  people  the  health  of  the 
sovereign  had  a  most  potent  influence  on  specu- 
lation. The  bare  anticipation  of  a  change  of 
rulers  gave  rise  to  fears  of  internal  revolution 
between  the  legitimists,  the  Bonapartists  and  the 


SPECULA  riON.  47 

republicans,  and  was  a  powerful  factor  in  depress- 
ing the  stock  market. 

Kings  and  princes  are  as  great  gamblers  as  any 
other  class.  King  Louis  Philippe  was  as  adroit 
and  crafty  in  the  acquisition  of  money  as  any 
financier  of  his  time.  He  speculated  secretly 
with  immense  success.  When  prices  were  high 
he  sold  out  his  stocks  and  rentes,  and  went  heavily 
short  of  the  market.  Then  he  would  feign  illness 
and  take  to  his  bed. 

No  doubt  the  physicians  of  his  court  were  par- 
ticeps  criminis  in  the  deception.  Daily  and 
hourly  bulletins  would  be  sent  out.  The  King 
was  growing  from  bad  to  worse,  from  dangerous 
to  critical. 

Down,  down  went  the  price  of  stocks  and 
rentes.  At  the  proper  time  his  agents,  at  his 
order,  quietly  covered  his  shorts  and  bought  up 
large  lines  of  securities  for  the  long  account. 

The  trick  having  been  consummated  the  King 
would  recover  by  easy  stage's.  The  profits  on 
both  sides  of  the  deal  would  be  princely. 

When  he  next  appeared  before  the  populace  he 
would  be  greeted  with  shouts  of  "  Vive  le  roi." 
But  what  would  his  subjects  have  thought  had 
they  known  he  had  been  through  their  pockets 
like  a  pirate  ? 


48  STOCK 


CHAPTER  VII. 

PRESENT   METHODS. 

IN  these  days  of  electric  telegraphs,  telephones 
and  railway  trains  news  travels  fast.  Still  the 
insiders  in  the  market  get  sure  points  of  more  or 
less  value  in  ample  time  to  discount  their  informa- 
tion before  the  outsiders  are  allowed  half  a  chance. 
On  fluctuations  of  from  one  to  five  points,  the  ins 
have  played  the  winning  cards  before  the  outs  can 
get  the  news  and  act  on  it  ;  and  if  they  do  act  on 
it,  they  are  generally  made  the  dupes  of  the  in- 
siders, who  are  then  ready  to  realize  profits  at 
their  expense. 

Often  half  a  dozen  capitalists  may  be  directors 
of  as  many  different  railroad,  steamship  and  tele- 
graph companies.  They  have  advance  information 
of  matters  affecting  their  corporations,  whether 
the  earnings  are  increasing  or  decreasing,  if  divi- 
dends are  to  be  reduced  or  passed,  or  defaults  are 
to  occur  in  the  payment  of  interest  on  bonds. 

There  are  always  a  more  or  less  number  of  spec- 
ulative capitalists  in  the  National  Legislature. 
During  the  sessions  of  Congress,  bills,  affecting 
steamship  subsidies,  the  extension  of  indebted- 
ness of  railroads  to  the  Government,  the  confirma- 


SPECULA  TION.  49 

tion  or  forfeiture  of  railway  land  grants,  etc.,  are 
allowed  to  drag  along  for  months  or  from  one 
session  to  another. 

Cipher  dispatches  pass  between  the  Washington: 
ring  of  speculators,  in  and  out  of  office,  and  their 
copartners  in  New  York.  Leading  operators  go 
to  the  Capitol  on  stock-jobbing  missions. 

Presently  the  news  appears  that  this  bill  or  that 
bill  will  be  called  up  in  committee,  or  before  the 
Senate  or  House,  on  a  certain  date,  and  favorable 
or  unfavorable  action  had  upon  it.  Too  often  this 
is  a  ruse  to  affect  the  stock  market.  The  public 
are  led  in  long  or  short.  Stocks  go  up  or  go  down 
on  the  expected  action  to  be  had  on  bills. 

The  bill  comes  up  in  due  time,  and  after  some 
jugglery  is  laid  on  the  table,  only  to  be  called  up 
again  and  again  at  future  times  for  stock-jobbing 
purposes,  before  final  action  is  had  and  the  bill  dis- 
posed of. 

Those  who  buy  or  sell  for  short  turns  generally 
find  the  effect  is  discounted  in  advance. 

Pointsajidtjr^axe^majiufactured  to  ojaler  by 
^financial  writers.  Sometimes  they  are  straight, 
but  more  often  very  crooked  steers  for  the  public 
to  be  guided  by. 

PANIC    IN    PACIFIC    MAIL. 

The  Pacific  Mail  Steamship  Company  had  a 
subsidy  of  $95,000  per  month  for  carrying  heavy 
freight  around  to  California  via  the  Isthmus,  for 

5 


50  ST0OC 

the  Union  and  Central  Pacific  Railroads.  It  also 
had  a  large  subsidy  from  the  Government  for  car- 
rying the  U.  S.  Mail. 

In  the  Spring  of  1885  the  stock  had  been 
boomed  up  to  63,  then  the  price  fell  back  to  about 
58,  and  people  were  tempted  to  buy  it.  To  the 
writer's  knowledge  one  man,  connected  with  large 
shipping  interests,  bought  500  shares  of  it  just 
before  the  close  of  business  one  afternoon. 

The  next  morning  the  news  was  in  all  the  city 
papers  that  the  Union  Pacific  Company  had  given 
notice  to  the  P.  M.  S.  S.  Co.  of  the  withdrawal  of 
the  subsidy  in  one  month's  time.  This  was  fol- 
lowed by  a  notice  from  the  Central  Pacific  to  the 
same  effect. 

At  the  opening  of  business  that  morning  the 
news  was  all  over  "  the  Street,"  and  there  was  a 
panic  to  get  out  of  it.  Bulls  threw  it  over  and 
bears  pitched  in  and  sold  it  heavily  short.  It  was 
said  that  fully  three-fourths  of  the  stock  of  the  par 
value  of  $20,000,000  was  thrown  over,  besides 
what  the  bears  sold.  Prices  tumbled  in  about 
two  days  to  46J. 

Subsequently  it  was  openly  charged  and  never 
disputed  that  certain  directors  in  Pacific  Mail  and 
in  Union  and  Central  Pacific  had  advance  infor- 
mation of  what  was  coming  in  time  to  enable 
them  to  sell  out  their  stock  and  go  heavily  short 
of  it.  This  accounted  for  the  previous  drop  from 
63  to  58. 


SPECULATION.  51 

The  springing  of  such  a  mine  on  a  confiding 
public  only  illustrates  the  heartless  character  of 
Wall  Street  speculation. 

Afterwards  the  loss  of  its  steamer,  the  "  City  of 
Tokio,"  valued  at  $1,250,000,  near  Yokohama, 
Japan,  and  the  loss  of  the  Government  mail  sub- 
sidy, by  the  action  of  Postmaster-General  Vilas, 
added  to  the  Company's  troubles. 

The  man  who  bought  the  500  shares  mentioned 
held  on  to  his  stock  and  eventually  came  out  with 
a  good  profit.  In  the  summer  of  1885  the  pay- 
ment of  a  subsidy  by  the  Pacific  railroads  was 
resumed,  and  in  the  fall  the  stock  was  boomed  up 
to  70. 

In  the  spring  of  1886,  on  the  breaking  out  of  the 
Trans-Continental  troubles,  the  Pacific  railroads 
again  broke  the  freight  subsidy,  and  up  to  March, 
1887,  it  has  not  been  resumed.  It  also  suffered 
the  loss  of  another  steamer,  the  "  Honduras,"  on 
the  Pacific  coast,  valued  at  $250,000.  The  Com- 
pany was  said  to  insure  its  own  steamers,  and,  if 
so,  the  loss  was  total. 

The  Company  paid  five  per  cent,  dividends  on 
its  stock  from  1884  to  January,  1886;  since  which 
time  the  dividends  have  been  passed. 

Taking  a  long  course  of  years  as  a  criterion, 
Pacific  Mail  stock  has  been  the  most  erratic  and 
has  had  the  .widest  fluctuations,  in  price,  of  any 
other  stock  on  the  speculative  list. 

From  1865,  down  to  the  present  time,  its  price 


52  STOCK 

has  been  anywhere  between  $329  and  $10.37-!  a 
share.  Just  think  of  it  ;  $32,900  for  100  shares, 
at  one  time,  and  only  $1,037.50  for  the  same  stuff 
at  another  time. 

A   SPECULATIVE    METHOD. 

Not  so  very  long  ago  the  President  of  a  certain 
railroad  company  was  quoted  as  saying  very  posi- 
tively "  that  certain  speculative  capitalists  had 
proposed  to  him  to  let  the  management  of  the 
road  run  down  in  order  to  apparently  depreciate 
the  property  and  thus  force  creditors  to  sell  their 
claims  at  much  less  than  their  real  value  !" 

This  brought  forth  the  following  newspaper 
comment  :  "A  more  rascally  suggestion  never 
came  from  persons  admitted  to  the  society  of 
honorable  men.  It  was  nothing  less  than  a  pro- 
posal to  rob  honest  creditors  under  cover  of  a  plot 
involving  treachery  and  false  pretences.  And  yet 
these  men,  by  reason  of  the  position  and  influence 
which  their  wealth  gives  them,  are  able  to  go  their 
way  as  if  nothing  had  happened  to  lower  them  in 
the  good  opinion  of  the  world." 

This  matter  was  afterwards  inquired  into  and 
whitewashed  by  a  committee  of  the  State  Legis- 
lature. 


SPECULATION.  53 

CALIFORNIA  SPECULATIONS. 


STORY  OF  THE  RISE  AND  FALL  OF  A   SAN   FRAN- 
CISCO   BOOK-KEEPER. 
\_San  Francisco  Letter  in  Sacramento  Bee.~\ 

I  am  confident  that  the  romance  of  stock-gam- 
bling will  never  be  written.  Life  here  is  too  rapid, 
too  pushing  for  men  to  pause  and  reflect  on  that 
curious  "  has  been  "  of  San  Francisco.  But  I  never 
stroll  down  Pine  Street,  or  linger  in  the  shadows 
of  Pauper  Alley,  but  I  meet  some  one  who  would 
be  entitled  to  a  place  in  that  unwritten  romance. 
The  tall  figure,  a  face  clean-cut  and  refined,  gait 
slow  and  painful  from  the  effect  of  an  old  wound, 
is  before  me  as  I  write.  James  D.  Walker,  ten 
years  ago,  was  a  member  of  the  bonanza  firm,  and 
his  check  was  good  for  $500,000,  aye,  a  million, 
at  any  bank  in  the  country.  Then  Flood  and 
Fair  bought  him  out,  and  Walker  opened  a  brok- 
er's office  under  the  Nevada  Bank,  and  did  all  the 
business  of  his  former  partners.  In  these  times 
Flood,  Fair  and  Mackay  were  on  the  top  notch 
of  speculation.  They  were  swinging  the  market 
at  their  own  sweet  will,  and  making  or  breaking 
the  thousands  who  were  battling  with  the  fierce 
tide  of  stock-gambling.  Alexander  Austin,  or 
M  Sandy,"  as  his  friends  used  to  call  him,  had  just 
served  his  term  as  tax  collector,  and  went  in  with 
Walker.    How  they  did  make  things  boom !    The 


54  STOCK 

high-salaried  clerks — the  book-keeper  got  $400  a 
month  and  had  a  sumptuous  lunch  served  every 
day  in  a  large  room  at  the  rear  of  the  office  at 
the  expense  of  the  firm.  Their  expenses  were 
enormous,  but  so  was  their  business.  The  partners 
were  clearing  $20,000  a  month,  but  they  were 
standing  on  the  brink  of  a  precipice.  Flood  re- 
marked that  other  and  outside  speculators  were 
manipulating  certain  stock  precisely  as  his  own 
brokers.  This  would  never  do,  so  he  called  a  con- 
sultation, and  informed  the  Walker  firm  that  this 
sort  of  thing  would  not  do ;  that  there  was  a  trai- 
tor in  the  camp  somewhere,  and  that  unless  he 
was  detected  and  fired  their  relations  could  not 
continue.  Close  and  earnest  investigation  was 
made,  but  without  avail.  Then  came  a  transac- 
tion of  more  than  ordinary  importance,  but  to  the 
intense  disgust  of  the  bonanza  firm  it  was  appar- 
ently foreseen  and  anticipated  by  these  same  out- 
side brokers,  who  were  kept  posted,  apparently, 
by  some  traitor  in  the  Walker-Austin  camp. 
Then  the  bonanza  people  changed  their  broker, 
and  from  that  hour  the  fortunes  of  Walker  &  Co. 
began  to  decline.  Matters  grew  worse  and  worse. 
Austin  committed  suicide.  Walker  sold  a  mag- 
nificent mansion  in  Oakland,  which  cost  him  close 
on  $500,000,  to  prop  up  the  waning  glory  of  the 
swell  firm.  At  last  it  was  a  clean  case  of  bust, 
and  I  don't  believe  Mr.  Walker  to-day  could  put 
his  hand  on  $200.     I  saw  him  looking  wistfully  at 


SPECULATION.  55 

the  Nevada  Bank  building,  probably  comparing 
the  different  states  of  Flood,  the  member,  and 
Walker,  the  ex-member  of  the  bonanza  firm.  He 
discovered,  when  too  late,  that  the  high-priced 
book-keeper  was  the  traitor.  He  sold  his  employ- 
ers, but  no  luck  ever  came  of  his  treachery,  and  he 
is  to-day  keeping  books  at  $50  a  month  for  a 
Hebrew  clothes  dealer  in  Portland,  Oregon. 

Walker  is  but  a  type  of  hundreds  of  others  who 
have  had  their  chance  and  their  day  on  Pine  Street. 
With  a  strange  fatuity  these  wrecks  still  cling  to 
the  locality  where  they  made  and  lost  fortunes  in 
the  past,  though  nine-tenths  of  them  have  not  a 
dime  to  speculate  with  and  could  not  get  credit 
for  a  glass  of  lager,  when  their  names  a  decade 
ago  were  sufficient  guarantee  for  a  dozen  or  fifty 
dozen  cases  of  champagne.  A  few  have  pulled 
out  with  a  small  stake,  and  there  are  some  there 
on  the  Street  yet  who  have  a  little  money  and 
would  speculate  if  they  saw  an  opening,  and  not  a 
few  fanatics  who  await  the  coming  of  the  Messiah 
— the  discovery  of  another  great  bonanza. 


56  STOCK 


CHAPTER  VIII. 

NORTHERN   PACIFIC   RAILROAD. 

FROM  its  inception  in  1864  to  the  driving  of 
the  "  golden  spike "  on  the  completion  of 
the  main  line  in  1883,  the  construction  of  the 
Northern  Pacific  Railway  was  attended  by  a 
series  of  misfortunes  to  all  who  meddled  with  it, 
almost  unparalleled  in  the  history  of  railroad 
building.  In  the  magnitude  of  losses  inflicted  on 
innocent  and  confiding  people,  the  "  Credit  Mo- 
bilier"  was  completely  overshadowed  by  it. 

In  the  beginning  the  most  enticing  advertise- 
ments were  kept  inserted  in  the  leading  secular 
and  religious  newspapers,  setting  forth  the  safety 
and  certainty  of  the  payment  of  interest  on  its 
bonds,  which  were  offered  to  investors  at  about  92, 
and  accrued  interest  at  7-30  per  cent. 

The  small  savings  of  clergymen,  widows,  the 
estates  of  orphans  and  others  were  drawn  into  it. 
Large  numbers  of  people  who  had  money  to  spare 
were  cajoled  into  the  investment. 

Interest  on  the  bonds  first  issued  was  paid  from 
the  proceeds  of  other  bonds  when  sold,  and  from 
sales  of  stock. 

In  1875  the  Company  defaulted  in  the  payment 


SPECULATION.  57 

of  interest  and  the  road  was  sold  under  fore- 
closure. The  proceeds  of  the  sale  were  not  suffi- 
cient to  satisfy  the  bonds  and  past  due  interest, 
hence  the  stock  was  wiped  out. 

A  committee  of  bondholders  bought  in  the  road, 
and  $1,400  par  value  of  new  preferred  stock  was 
issued  for  each  $1,000  bond  and  past  due  interest. 
Those  who  depended  on  the  interest  of  their 
investments  to  pay  necessary  living  expenses  now 
had  to  take  stock  which  from  that  time  to  this  has 
paid  them  no  income  whatever. 

In  1883  a-  scrip  dividend  of  nTV  per  cent, 
was  paid  on  the  preferred  stock,  but  this  was  not 
cash.  It  was  equivalent  to  the  issue  of  so  much 
new  stock  which  bore  no  cumulative  income. 

Jay  Cooke,  a  very  rich  man,  became  President 
of  the  Company  and  chief  promoter  in  building 
the  road,  was  himself  overwhelmed  in  the  disaster 
attending  the  enterprise. 

After  the  foreclosure,  the  Company  was  reor- 
ganized, and  the  building  of  the  road  was  con- 
tinued with  money  obtained  by  the  issue  of  new 
bonds,    stock     and    proceeds    from     land    sales. 

The  road  had  an  enormous  land  grant  from  the 
Government,  equivalent  to  12,800  acres  per  mile 
in  the  States  and  25,600  acres  per  mile  in  the 
Territories. 

Its  stock  capitalization  now  is  nearly  $40,000,000 
of  preferred  and  $49,000,000  of  common  stock. 
Its  preferred  stock  (at  present  writing  worth  about 


58  STOCK 

60)  is  received  at  par  in  payment  for  its  lands  east 

of  the  Mississippi  River,  and  the  stock  canceled. 

The  senseless,  crazy  character  of  the  bull  specu- 
lation in  1 88 1-2  cannot  be  better  illustrated  than 
in  the  Oregon  Trans-Continental  mania  which  car- 
ried away  millions  of  investors'  money. 

The  basis  of  the  venture  was  the  Oregon  Rail- 
way and  Navigation  Company,  which  had  no  com- 
petition, and  earned  handsome  dividends  trans- 
porting the  products  of  the  rich  State  of  Oregon. 

Money  was  wanted  to  push  the  Northern  Pacific 
Railway  to  completion.  Henry  Villard  became 
President  of  the  corporation,  and  to  obtain  money 
conceived  the  idea  of  a  Construction  Company. 
So  the  Oregon  Trans-Continental  Co.  was  brought 
into  life  with  a  capital  stock  of  $50,000,000,  of 
which  $40,000,000  was  issued,  and  was  eagerly 
grabbed  for. 

Villard  got  all  the  money  he  needed  from  the 
proceeds  of  the  sale  of  O.  T.  stock,  and  bought  up 
Oregon  Railway  and  Navigation,  Northern  Pacific 
common  and  preferred  stocks,  until  the  control  of 
those  companies  was  secured  and  transferred  to 
the  O.  T.  Co.,  with  Villard  as  President  of  them 
all. 

The  O.  R.  and  N.  stock  paid  dividends  of  10 
per  cent.  N.  P.  preferred  paid  a  scrip  dividend  of 
nTV  per  cent.,  and  in  January,  1883,  O.  T.  began 
to  pay  dividends  of  6  per  cent,  in  cash. 

All  these  stocks  were  enormously  inflated  in 


SPECULATION.  59 

1882.  The  highest  prices  were:  O.  R.  and  N., 
163J;  N.  P.  preferred,  103-f ;  N.  P.  common,  54!; 
and  O.  T.,  95J. 

The  issue  of  O.  T.  stock  was  a  master  stroke. 
Villard  was  a  star  on  the  financial  horizon.  The 
manipulation  of  his  stocks  on  the  market  was 
adroit  and  successful,  and  the  N.  P.  Railway  was 
brought  to  completion. 

But  it  was  at  a  fearful  expense,  not  only  to  a 
confiding  public,  but  to  the  insiders  in  it.  Villard 
himself  was  caught  in  the  whirlwind,  and  the  bulk 
of  his  fortune  was  swept  away  like  a  dream. 

It  was  easy  to  hold  up  quotations  and  advance 
them  as  long  as  money  could  be  had  for  the  ask- 
.ing.  But  every  purse  has  its  bottom,  and  even 
Villard's  was  reached, when  the  public  were  obliged 
to  sell  on  the  discovery  that  O.  T.  was  getting 
entirely  dependent  on  O.  R.  and  N.  10  per  cent, 
dividends.  And  that  any  dividends  on  N.  P.  pre- 
ferred were  impossible,  because  its  reported  earn- 
ings were  for  transportation  of  construction  mate- 
rial for  its  own  road. 

The  purchasing  power  of  Oregon  Trans-Conti- 
nental was  exhausted.  Confidence  was  gone.  The 
end  of  its  tether  was  reached.  The  bubble  had 
burst,  there  were  no  earnings  for  dividends  and 
no  public  to  buy  surplusage  of  stock. 

The  bears  had  nosed  out  all  the  weak  points  in 
the  armor  of  these  corporations.  They  made  capi- 
tal out  of  the  fact  that  a  great  part  of  the  road 


60  STOCK 

was  built  through  a  wilderness,  and  built  ten  to 
fifteen  years  in  advance  of  the  settlement  and 
growth  of  a  profitable  freight  business  along  its 
line. 

The  Northern  Pacific  was  built  eastward  from 
Puget  Sound  and  Portland,  Oregon,  and  westward 
from  Superior  City,  Wisconsin.  The  two  ends  of 
the  road  met,  the  last  rail  was  laid,  and  Mr.  ViL 
lard,  accompanied  by  a  junketing  party  of  Ameri- 
can and  foregn  capitalists,  went  out  to  celebrate 
the  event  on  September  8,  1883,  by  the  driving  of 
the  last — a  golden  spike. 

It  was  more  like  driving  a  nail  into  his  own  cof- 
fin, for  the  bear  organs  were  filling  the  whole  spec- 
ulative atmosphere  with  blue  ruin  and  disaster  to 
these  specialties. 

In  the  fore  part  of  September,  1883,  insiders 
were  getting  out.  There  was  no  other  outlook 
except  severe  and  continued  liquidation,  which 
set  in  the  last  half  of  September  with  such  energy 
it  could  not  be  checked  until  it  had  run  its  course. 

Confidence  was  undermined,  values  crumbled 
away,  until  at  the  end  of  the  year  1883  O.  R.  and 
N.  stock  had  declined  to  90  ;  N.  P.  preferred  to 
49!  ;  N.  P.  common  to  23^,  and  O.  T.  to  29-^. 
Liquidation  in  these  stocks  continued  in  1884  and 
the  lowest  prices  reached  were  O.  R.  and  N.,  6of  ; 
N.  P.  preferred,  2>7i ;  N.  P.  common,  14,  and  O. 
T.,  6J. 

Dividends  on  O.  R.  and  N.  were  reduced  to  6 


SPECULATION.  61 

per  cent.,  those  on  O.  T.  were  passed.  The  O.  T. 
as  a  construction  company  had  accomplished  its 
mission.  Now  the  O.  T.  stock  is  intrinsically- 
worth  pro  rata  in  the  ratio  of  the  market  value  of 
its  holdings  of  Oregon  Navigation  and  the  North- 
ern Pacific  stocks. 

Mr.  Villard  resigned  the  Presidencies  of  the 
Companies  one  after  the  other  and  retired  to  Eu- 
rope, for  a  time,  a  thoroughly  demoralized  man.  In 
the  height  of  his  prosperity  he  was  reputed  worth 
$5,000,000,  out  of  which  it  was  estimated  he  saved 
half  a  million  from  the  crash.  Such  was  the  origin 
and  the  end  of  the  famous  ''blind  pool." 

Although  built  in  advance  of  the  influx  of  popu- 
lation, it  is  very  rich  in  future  possibilties.  Pru- 
dently managed  and  not  too  closely  paralleled  by 
other  roads,  the  Northern  Pacific  is  destined  to 
become,  in  time,  one  of  the  most  magnificent 
railway  properties  in  the  western  world. 


LUCK  IN  WALL  STREET. 


A  FORTUNE   OF   $2,000,000  ROLLED   UP   IN   FOUR 
YEARS. 

Broker  and  Sunday-school  Superintendent 


is    understood    to   have   made  about 

$200,000  in  Wall  Street  during  the  last  month, 
and  he  is  now  worth,  it  is  estimated,  $2,000,000. 
He  is  a  member  of  the  firm*  of  


62  STOCK 

and  is  the  Superintendent  of  a  Methodist  Sun- 
day school. 

His  luck  in  the  market  has  been  phenomenal, 
and  his  moves  have  been  so  bold  and  successful 
that    he   has   been  as  much    a  central    figure   as 

.     His  fortune  has  all  been  made 

in  four  years.  At  the  beginning  of  the  decline  in 
1880,  he  was  worth,  perhaps,  $100,000.  He  then 
sold  Wabash  at  the  top  figures — around  96^  — 
and  did  not  cover  until  56  was  touched.  On  the 
reaction  he  went  short  again  and  followed  the 
stock  down  to  about  3^.  Few  men  have  made 
money  faster  than  he  did  in  that  deal.  He  was 
short  before  the  May  panic  last  year.  He  cov- 
ered up  his  stocks  at  a  profit  a  few  days  previous 
to  the  crash,  and  went  to  Philadelphia  to  attend  a 
religious  convention.  While  he  was  away  the 
panic  took  place.  Had  he  kept  out  his  shorts, 
which  he  would  have  done  if  he  had  remained  in 
town,  he  would  have  made  an  additional  profit  of 
$250,000  in  the  smash. 

The  lowest  prices  were  touched  the  last  of  June, 
1884.  He  started  to  bull  the  market  immediately 
afterwards,  and  picked  out  the  stocks  that  after- 
wards showed  profits.  He  was  loaded  up  with 
stocks  in  the  last  rise  and  made  great  gains  in  St. 
Paul,  Lackawanna,  Northwest,  Union  Pacific, 
Western  Union  and  Lake  Shore. 

He  never  was  an  ardent  admirer  of  Mr.  Gould, 
and  has  had  little  to'  do  with  that  speculator.     He 


SPECULA  TION.  63 

was  on  the  side  of  S.  H.  Kneeland  and  against 
Gould  in  the  elevated  railway  fight  up  to  the 
time  of  the  settlement  and  consolidation  of  the 
roads.  Gould  has  on  many  occasions  recognized 
his  strength  in  the  market  and  invited  him  to  con- 
fer with  him. 

Mr. yells  with  all  the   lustiness  of  a 

cowboy  in  the  Stock  Exchange.  He  is  a  man  of 
excellent  taste  in  dress,  although  his  clothes  are 
of  a  quiet  nature.  He  deals  in  figures  of  speech 
in  conversation  that  are  always  to  the  point  and 
are  likewise  very  taking.  He  has  dark  hair,  which 
he  parts  on  the  side,  and  a  dark  mustache.  When 
talking  he  usually  picks  up  a  piece  of  paper,  which 
he  abstractedly  pulls  to  pieces  or  twirls.  He  is  a 
patron  of  art,  and  at  his  residence  in  Madison  ave- 
nue has  a  collection  of  pictures  worth  $100,000. 
As  he  is  a  good  judge  his  works  include  few  poor 
examples.— N.  Y.  World,  1886. 


64  STOCK 


CHAPTER  IX. 

UNION  AND   CENTRAL  PACIFIC   RAILWAYS. 

DURING  the  administration  of  Franklin  Pierce 
Congress  ordered  several  surveys  to  be  made 
to  ascertain  the  feasibility  of  connecting  Califor- 
nia and  the  East  by  railroads. 

In  1863  Government  aid  was  extended,  the  com- 
panies incorporated,  and  the  work  of  construction 
was  begun. 

The  Central  Pacific  was  built  eastward  from 
San  Francisco  to  Ogden,  Utah,  a  distance  of  883 
miles  of  main  line.  A  land  grant  of  millions  of 
acres  was  given  by  Act  of  Congress,  also  large 
subsidies  in  United  States  bonds,  for  which  the 
Government  took  long-term  liens. 

The  Union  Pacific  was  built  westward  from 
Omaha,  Nebraska,  connecting  with  the  Central 
Pacific  at  Ogden.  The  through  line  from  Omaha 
to  San  Francisco,  a  distance  of  1,900  miles,  was 
completed  in  1869. 

The  Union  Pacific  had  a  land  grant  of  12,800 
acres  per  mile,  and  a  United  States  Bond  subsidy 
of  upwards  of  $27,000,000,  also  on  long-term  liens. 
On  the  extension  of  its  road  and  branch  lines  it 


SPECULA  TION.  65 

secured  a  large  additional  subsidy  and  several 
more  millions  of  acres  of  the  public  lands. 

This  Company  was  formed  by  a  consolidation  of 
the  Union  Pacific,  the  Kansas  Pacific  and  the 
Denver  Pacific.  Altogether  it  had  a  United  States 
Bond  subsidy  of  over  $33,500,000,  and  a  land 
grant  estimated  at   18,083,227  acres. 

The  Union  Pacific  and  Central  Pacific  were  not 
making  their  payments  on  the  Government  liens 
as  required  by  the  Act  of  1864.  By  the  "  Thur- 
man  "  Act  of  1878,  one-half  the  charges  for  Gov- 
ernment transportation  were  to  be  withheld,  and 
the  Central  Pacific  was  to  pay  $1,200,000  per 
annum  into  a  sinking  fund  towards  the  extinction 
of  its  debt.  Similar  obligations  were  also  imposed 
on  the  U.  P.,  but  neither  Company  has  lived  up 
to  them. 

In  the  recent  exposures  by  the  New  York 
World,  the  united  debts  of  these  two  companies 
to  the  Government,  for  principal  and  interest,  is 
stated  at  the  enormous  sum  of  over  $157,000,000. 

The  "  Pacific  Railroad  Ring  "  has  long  main- 
tained a  powerful  and  ravenous  lobby  at  Washing- 
ton. Its  objective  point  is  to  secure  the  passage 
of  a  "  seventy  or  eighty  year  extension  bill  "  at  a 
nominal  interest  of  about  three  per  cent,  on  their 
debts. 

The  World  fights  the  "  extension  bill  "  tooth 
and  nail,  and  says  :  "The  result,  even  if  the  pay- 

ents  were  made  in  good  faith,  would  be  the  pay- 
6 


66  STOCK 

ment  by  the  companies  of  eleven-twelfths  of  the 
interest  due,  and  a  virtual  gift  to  these  corpora- 
tions of  about  $150,000,000  of  the  principal." 

The  stock,  bonded  and  other  debts  of  the  U.  P. 
are  estimated  at  over  $200,000,000,  and  those  of 
the  C.  P.  at  over  $160,000,000. 

Had  these  roads  been  managed  with  prudence 
and  economy  in  the  interest  of  their  stockholders, 
they  would  now  be  in  a  highly  prosperous  condi- 
tion. Their  obligations  to  the  Government,  all 
fixed  charges  and  debts  as  they  became  due, 
might  have  been  promptly  met  and  good  divi- 
dends paid  on  the  stock. 

Instead  of  this,  the  Union  Pacific,  almost  from 
first  to  last,  has  been  the  El  Dorado  of  all  the 
arch  conspirators  in  the  country,  in  and  out  of 
Congress.  Its  stock  has  been  alternately  inflated 
and  depressed  to  the  enrichment  of  railroad 
wreckers,  at  the    expense    of    a  deluded   public. 

The  U.  P.  paid  dividends  of  from  54  to  6f  per 
cent,  from  1878  to  1881,  then  7  per  cent,  to  1884, 
when  dividends  were  passed. 

The  C.  P.  paid  6  per  cent,  from  1880  to  1884, 
when  the  dividends  stopped. 

The  highest  price  of  U.  P.  was  130!  in  1881, 
and  the  lowest,  $28  per  share  in  1884.  C.  P.'s 
highest  and  lowest  was  102 J  and  $30  per  share. 

There  is  one  peculiarity  about  Central  Pacific 
stock  which  makes  many  operators  shy  clear  of  it 
at  any  price.     That  is  the  personal  liability  at- 


SPECULA  TION.  67 

tached  to  it.  By  the  laws  of  California,  if  the 
Company  fails  to  meet  its  obligations  to  that 
State  and  its  citizens,  the  stock  can  be  assessed 
for  the  deficit  on  all  who  hold  it. 

Some  bankers  even  hate  to  carry  it  for  custom- 
ers, in  their  own  name,  and  instances  can  be  cited 
in  which  they  have  carried  the  stock  in  the  name 
of  irresponsible  clerks. 

In  1882-3  sharp  business  men,  of  large  and 
small  capital,  were  fooled  and  deceived  by  the 
atmosphere  of  over-confidence  in  the  value  and 
stability  of  railway  securities.  They  would  not 
believe  the  arguments  of  the  bears  until  the  finan- 
cial storm  had  burst  with  all  its  fury,  and  involved 
them  in  immense  losses. 

Union  Pacific  had  strong  friends.  Millionaire 
investors  and  others  believed  in  it.  Some  had 
stock  bought  at  1 10  and  upwards.  They  held  on 
to  it  and  bought  more  in  the  90s,  80s  and  70s  to 
average  up.  Some  accumulated  ten,  twenty, 
thirty  thousand  shares  before  they  called  a  halt. 

All  this  time  the  bears  were  working  their  bat- 
teries of  denunciation  of  the  utter  worthlessness 
of  the  stock.  It  was  openly  talked  in  "  the  Street" 
that  it  was  not  worth  $5  a  share  intrinsically. 

Down,  down  went  the  price,  and  the  passing  of 
the  dividend  in  1884  added  to  the  pressure  to  sell. 
In  the  50s,  40s  and  30s  holders  were  throwing  it 
over,  in  some  cases  at  losses  of  hundreds  of  thou- 
sands of  dollars. 


68  STOCK 

The  stock  had  been  paying  dividends,  while 
defaulting  in  the  payment  of  its  obligations  to  the 
Government,  and  the  actual  condition  of  affairs 
was  kept  covered  up  and  concealed  by  a  peculiar 
system  of  book-keeping. 

U.  P.  went  to  28,  and  would  have  gone  lower 
had  not  Jay  Gould  asserted  his  power  to  stay  the 
decline  by  purchasing  large  blocks  of  it.  Doubt- 
less he  made  a  profitable  turn  when  the  price  was 
sent  spinning  up  to  58  three  months  after. 

Central  Pacific  went  to  30  and  would  probably 
have  declined  in  as  great  a  ratio  as  U.  P.,  but  for 
the  strong  hold  Stanford,  Crocker  and  Hunting- 
ton had  on  it. 

When  Charles  Francis  Adams,  Jr.,  assumed  the 
Presidency  of  Union  Pacific  in  place  of  Sidney 
Dillon,  a  radical  change  in  the  management  was 
inaugurated,  which  the  friends  of  the  Company 
hoped  would  extricate  it  from  its  difficulties.  But 
until  their  obligations  to  the  Government  are  in 
some  way  adjusted,  it  is  not  probable  that  either 
of  these  roads  can  resume  the  payment  of  divi- 
dends. 


SPECULA  TION.  69 


CHAPTER  X. 

EVENTS   PRECEDING  PANIC  OF    1 884. 

FOR  five  years  previous  to  1883  the  building  of 
new  railroads  was  unprecedented.  Many- 
thousand  miles  were  built  ;  some  into  new  thinly 
settled  regions  in  the  West  and  Southwest. 

Others  paralleled  old  roads  which  had  ample 
facilities  for  all  the  business  contiguous  to  their 
lines  for  years  to  come. 

The  Lake  Shore  was  paralleled  for  about  500 
miles  by  the  N.  Y.,  Chicago  and  St.  Louis 
("  Nickel  Plate  ").  The  N.  Y„  West  Shore  and 
Buffalo  was  being  constructed  almost  alongside 
the  great  four-track  N.  Y.  C.  H.  R.  R.  for  about 
450  miles. 

In  the  boom  from  1878  to  1882  the  public 
became  loaded  up  with  a  mass  of  stocks  and 
bonds  of  new  companies,  and  other  securities, 
issued  on  consolidations  of  old  companies. 

All  this  stuff  was  floated  in  the  general  activity. 
Those  who  bought  it  afterwards  found  there  was 
no  prospect  of  dividends  on  stocks,  or  interest  on 
many  classes  of  bonds,  for  years  to  come. 

With  no  income  and  the  value  of  their  securi- 
ties depreciating,  the  public  began  to  liquidate  in 


70  STOCK 

1883.  In  tne  feU  °f  tnat  year  came  tne  great 
break  in  the  "  Villard  "  stocks,  following  the  driv- 
ing of  the  "  golden  spike,"  completing  the  main 
line  of  the  Northern  Pacific  Railway. 

January,  1884,  found  the  speculative  public 
depressed  and  demoralized.  A  large  short  inter- 
est was  outstanding,  and  in  the  latter  part  of  the 
month  combinations  were  formed  to  drive  the 
bears  to  cover.  This  advanced  prices  and  kept 
things  steady  until  March. 

Strong  bull  pools  bought  up  large  lines  of  Del., 
Lack,  and  Western  and  N.  Y.  Central,  and  in 
March  there  was  a  corner  in  "  Lack.,"  which  car- 
ried the  price  up  from  123  to  133^-  regular,  and 
139J  for  cash  stock.  Shorts  in  N.  Y.  C.  were 
also  squeezed,  and  the  price  run  up  from  113^ 
to  122. 

All  the  other  market  strengthened  up  in  sympathy 
and  demoralized  the  bears  for  a  time.  But  large 
holders  took  advantage  of  the  strength  to  feed  out 
the  stocks  they  had  been  carrying.  This  caused  a 
fluctuating  and  gradually  declining  market  until 
May. 

THE   PANIC. 

The  rascalities  of  Ferdinand  Ward  culminated 
in  the  suspension  of  the  Marine  Bank  on  May  6th, 
and  the  house  of  Grant  &  Ward  was  reported  in 
trouble  for  about  half  a  million  dollars. 

On  May  9th  Grant  &  Ward  were  reported  irre- 
trievably ruined,  and  Ward's  residence  in  Brook- 


SPECULATION.  71 

lyn  was  seized  by  the  Sheriff  and  placed  in  charge 
of  a  deputy.  Ward  was  shadowed  night  and  day 
by  a  dozen  private  detectives  until  arrested  on 
May  2 1  st. 

On  May  14th  the  panic  was  begun  by  stock 
brokers  and  speculators  throwing  their  stocks  on 
the  market,  owing  to  the  great  shrinkage  in  values. 

George  I.  Seney's  Metropolitan  Bank  suspend- 
ed, and  its  correspondent,  the  Atlantic  Bank  of 
Brooklyn,  followed.  About  half  a  score  of  brok- 
ers went  under,  and  other  failures  were  believed  to 
be  impending. 

On  May  15th  the  Clearing  House  Banks  united 
together  to  support  each  other,  by  the  issue  of 
Clearing  House  certificates.  This  checked  the 
panic  somewhat,  and  enabled  the  Metropolitan 
Bank  to  resume.  Manager  W.  A.  Camp,  of  the  Clear- 
ing House  said  :  "  That  Institution  was  ready  to 
lend  the  Metropolitan  Bank  any  amount  from  one 
million  to  five  millions  of  dollars."  George  I. 
Seney  resigned  as  President  of  the  bank.  The 
discovery  was  made  that  the  Second  National 
Bank  had  been  robbed  of  about  three  million  dol- 
lars through  the  stock  speculations  of  its  Presi- 
dent. This  loss  was  immediately  made  good  by 
his  father  and  other  directors,  and  there  was  no 
hiatus  in  the  business  of  the  bank. 

The  morning  papers,  the  same  day,  had  report- 
ed the  failure  of  ,   President  and 

chief  promoter  of  the  Bankers'  and   Merchants' 


72  STOCK 

Telegraph  Company.  On  the  opening  of  business 
at  the  Exchange  this  stock  quickly  dropped  down 
60  per  cent,  or  more. 

Fisk  &  Hatch  failed,  and  Mr.  Hatch,  who  was 
President  of  the  Stock  Exchange,  resigned.  The 
general  market  declined  from  1  to  5  per  cent. 

On  May  16th  the  panic  was  continued  amid 
great  excitement.  The  Newark,  N.  J.,  Savings 
Institution  suspended  payment.  An  attache  of 
the  house  of  Grant  &  Ward  reported  :  "  All  we 
know  at  present  is  that  our  liabilities  are  between 
twelve  and  fourteen  million  dollars." 

On  May  17th  the  panic  and  excitement  was  con- 
tinued and  two  more  failures  were  reported. 

On  May  19th  the  Associated  Banks  and  the 
Sub-Treasury  took  measures  to  stop  the  panic, 
and  confidence  began  to  be  restored. 

On  May  21st  Ferdinand  Ward  was  summoned 
before  the  Grand  Jury  for  examination.  He  was 
arrested  during  the  day  and  remained  all  night  at 
the  Sinclair  House  in  charge  of  a  Deputy  Sheriff. 

On  May  22d  Ward,  pale  and  haggard,  was  com- 
mitted to  Ludlow  Street  Jail. 

On  May  26th  James  D.  Fish,  President  of  the 
Marine  Bank,  was  arrested  and  released  on  giving 
a  bail  bond  with  sureties  in  $30,000. 

On  May  27th  the  dishonored  President  of  the 
Second  National  Bank  skipped  to  join  the  rogues' 
colony  in  Canada. 

About  the  time  all  these  events  were  transpir- 


SPECULA  TION.  73 

ing  the  Bank  of  the  Manhattan  Company  was 
robbed  of  $150,000  by  a  dishonest  Teller. 

During  all  this  time  while  the  panic  lasted,  the 
general  public,  who  had  invested  their  money  in 
Wall  Street,  demoralized  by  fear  and  distrust, 
were  throwing  over  their  stocks  at  immense  losses. 

The  panic  was  precipitated  by  the  discovery  of 
a  line  of  gigantic  frauds  hitherto  unmatched  in  our 
financial  history.  The  worst  of  these  frauds  was 
perpetrated  through  the  influence  of  the  name, 
but  not  with  the  knowledge  and  connivance  of, 
the  great  Soldier-President,  Gen.  U.  S.  Grant. 

From  1861,  until  he  got  into  Wall  Street,  Gen. 
Grant  was  a  Mascot,  i.  e.,  the  very  impersonation 
of  good  luck.  In  war  and  in  peace  his  career  was 
one  continued  success,  until  his  unfortunate  con- 
nection with  Ferdinand  Ward. 

The  office  of  Grant  &  Ward  was  on  the  base- 
ment floor  of  the  United  Bank  Building  at  Broad- 
way and  Wall  Street.  Gen.  Grant  himself  was 
President  of  the  Mexican  Central  Railway  Co., 
and  had  his  office  on  an  upper  floor  of  the  same 
building.  * 

He  usually  came  through  the  hall,  to  go  up  in 
the  elevator  to  his  office,  about  10  o'clock  A.  M., 
sometimes  stopping  in  the  lower  office  awhile  to 
chat.  Almost  invariably  he  puffed  away  at  a 
strong  cigar  and  presented  a  picture  of  a  man  self- 
satisfied,  contented  and  happy  with  himself  and 
all  the  world. 


74  STOCK 

No  man  knowingly  standing  on  the  brink  of  a 
volcano,  ready  to  burst  under  his  feet,  could  have 
shown  such  an  appearance  of  prosperity  and  sang 
froid  as  he  did  up  to  the  time  of  the  crash. 

It  was  one  of  the  characteristics  of  Gen.  Grant, 
that  when  he  put  implicit  trust  in  a  man,  his  con- 
fidence in  that  man  could  hardly  be  shaken  by 
anything  short  of  an  earthquake. 

He  trusted  Ward  and  believed  his  stories  of  the 
great  profits  that  were  being  realized  in  the  busi- 
ness. He  was  led  to  believe  that  he  and  his  boys 
had  millions  of  dollars  of  undivided  profits  in  the 
firm. 

When  the  full  extent  of  Ward's  rascality  was 
revealed,  in  which  Gen.  Grant's  great  name  was 
involved  in  a  defalcation  of  millions  of  dollars, 
the  change  in  him  was  fearful. 

During  the  panic  the  bears  were  in  their  glory. 
They  were — figuratively— growing  fat  off  the  car- 
casses of  the  bulls. 

Imagine  the  sacking  of  Magdeburgh,  think  of 
cities  looted,  given  up  to  slaughter,  pillage  and 
rapine;  then  the  reader  has  a  good  idea  of  the 
slaughter  of  values,  the  sacking  and  pillage  of  un- 
sophisticated "  lambs  "  who  had  become  entangled 
in  the  vicarious  business  of  stock  speculation. 

For  four  or  five  days  the  streets  in  the  vicinity  of 
the  Stock  Exchange  might  have  recalled  to  mind 
the  legends  of  the  hordes  of  Goths  and  Vandals 
who  overran  the  Roman  Empire. 


SPECULATION-.  75 

Nondescript  people  flocked  in  from  all  quarters. 
New  Street  was  full  of  them.  They  overflowed 
into  Exchange  Place,  Broadway,  Wall  and  Broad 
Streets,  reminding  one  of  the  late  Charles  Reade's 
story  of  the  Lion  and  the  Eland. 

In  an  opening  of  the  forest  a  lordly  lion  had 
pounced  on  an  eland,  and  while  he  tore  away  at 
his  prey,  lion  cubs,  hyenas,  jackals  and  vultures, 
licking  their  jaws,  and  uttering  discordant,  chat- 
tering cries,  formed  a  circle  around,  ludicrous  to 
behold. 

A  simile  :  The  hordes  of  nondescript  people  in 
the  streets  were  typical  of  the  lion  cubs,  hyenas, 
jackals  and  vultures  hungry  for  a  share  of  the 
spoils.  The  eland  was  the  general  public  being 
pillaged  of  their  money,  while  the  lion  was  the 
demon  of  demoralization  and  plunder  within  the 
"bear  garden  "  keeping  the  outside  rabble  at  bay. 


76  STOCK 


CHAPTER  XI. 

A   SUCCESSFUL  OPERATOR. 

NEXT  to  Jay  Gould  and  the  late  W.  H.  Van- 
derbilt,  probably  the  most  prominent  figure 
in  speculation  of  late  years  was  the  late  Charles 
F.  Woerishoffer. 

He,  Addison  Cammack  and  Henry  N.  Smith, 
since  the  death  of  President  Garfield,  were  the 
greatest,  and,  excepting  Smith,  the  most  success- 
ful bears  in  Wall  Street. 

Woerishoffer's  risks  were  terrific,  at  times  200,- 
000  shares  on  the  short  side. 

Just  think  of  a  combination  on  the  bull  side 
against  him  at  such  a  time,  and  a  sudden  advance 
of  ten  per  cent,  above  the  selling  price  of  his 
shorts.     The  loss  would  have  figured  $2,000,000. 

A  jump  of  20  per  cent,  advance  on  him  would 
figure  $4,000,000.  And  if  a  loaning  rate  of  $400 
per  day  on  each  100  shares  was  imposed,  that  of 
itself  would  be  $800,000  for  one  day. 

Were  the  stocks  he  was  short  of  concentrated 
in  a  few  strong  hands,  such  results  could  have 
been  brought  about  before  he  could  recover  his 
stocks,  or  make  a  private  settlement. 

But  Woerishoffer  was  not  the  man  to  take  such 


SPECULATION.  77 

enormous  risks,  unless  he  knew  that  the  bulk  of 
stocks  were  widely  distributed,  in  the  hands  of 
those  who  could  not  combine. 

Many  years  ago  just  such  a  combination  was 
formed  against  Jacob  Little,  the  Great  Bear. 
Erie  stock  had  been  boomed  above  its  real  value. 
He  sold  it  heavily  short  on  options.  All  his  con- 
tracts were  eagerly  taken  by  his  rivals.  By  the 
time  these  contracts  became  due  all  the  stock  had 
been  withdrawn  beyond  his  reach  for  delivery.  In 
the  opinion  of  "  the  Street  "  he  was  a  ruined  man. 
It  happened  that  Mr.  Little  held  certificates  of 
indebtedness  against  the  Erie  Company  for  which 
stock  was  to  be  issued  in  exchange.  On  the 
eventful  day  he  went  to  the  office  of  the  Erie 
Company  and  demanded  the  stock  called  for  by 
his  certificates.  With  this  stock  Mr.  Little  settled 
his  contracts  to  the  discomfiture  of  his  oppo- 
nents. 

Woerishoffer  occasionally  suffered  immense 
losses,  but  more  frequently  made  enormous  profits, 
At  the  time  of  his  death,  in  the  Spring  of  1886, 
his  fortune  was  estimated  as  high  as  $10,000,000, 
and  not  below  $5,000,000  in  any  event. 

He  was  born  at  Geinhausen,  in  the  Province  of 
Hesse,  in  1843,  came  to  America  in  1865,  and 
entered  a  stock  house  as  clerk.  In  1868  he  secured 
a  seat  in  the  Stock  Exchange,  founded  the  house 
of    Woerishoffer  &  Co.,  and   soon   had   a  large 


78  STOCK 

clientele  of  Dutch  and  German  bankers  and  specu- 
lators. 

He  became  the  most  active  speculator  in  "the 
Street,"  and  employed  more  brokers  than  any 
other  operator,  except  Jay  Gould.  He  was 
known  to  have  paid  as  high  as  $500,000  a  year  in 
commissions  to  brokers  for  executing  his  orders. 
His  brokers  were  all  over  Wall  Street.  It  was 
impossible  to  detect  his  hand  in  the  market  when 
he  attempted  concealment,  for  the  brokers  of  his 
own  house  were  never  sure  but  that  the  man 
opposite  and  at  cross  purposes  had  precisely  the 
same  client. 

The  extent  of  his  operations  was  colossal,  some- 
times as  high  as  50,000  shares  in  a  single  day. 
His  following  among  the  Germans  and  others  was 
immense. 

One  of  the  things  which  won  him  repute  was  a 
fight,  in  1879,  witn  Gould,  Sage  and  other  capital- 
ists interested  in  securing  the  control  of  the  Kan- 
sas Pacific  Railroad  Company.  As  the  represen- 
tative of  Frankfort  investors,  Woerishoffer  had 
contracted  to  sell  certain  Denver  extension  bonds 
to  the  Gould-Sage  syndicate  at  80.  But  the  syn- 
dicate afterwards  decided  it  would  be  to  their 
advantage  to  declare  the  old  contract  off,  and 
named  70  as  the  price  at  which  they  would  take 
the  bonds. 

Woerishoffer  said  nothing  ;  but  cable  messages 
passed  between  him  and  the  English  and  German 


SPECULATION.  79 

security  holders  ;  and  before  the  New  York  syndi- 
cate was  prepared  for  his  campaign,  he  had  cor- 
raled  in  the  United  States  Trust  Company  more 
than  a  majority  of  the  bonds  the  syndicate  were 
after.  Then  he  informed  the  gentlemen  who  had 
insisted  that  80  was  too  high  that,  inasmuch  as 
their  big  foreclosure  scheme  depended  on  having 
the  control  of  these  bonds,  they  would  have  to 
pay  100,  and  he  did  not  let  a  bond  go  under  par. 
About  $6,000,000  of  bonds  were  involved  in  the 
deal.  It  made  Woerishofler  famous  in  Germany 
and  in  London,  as  well  as  in  New  York. 

It  was  he  who  conceived  the  scheme  of  building 
the  Denver  &  Rio  Grande  Railroad,  which  he 
pushed  to  completion,  and  realized  large  profits 
for  himself  and  friends. 

When  the  stock  was  quoted  above  no,  the 
Company  had  a  most  brilliant  outlook,  and  the 
public  was  inveigled  into  the  purchase  of  long 
stock  which  he  and  his  friends  held,  and  a  large 
line  of  shorts. 

He  then  began  the  bear  campaign  on  this  spe- 
cialty, and  is  supposed  to  have  covered  some  stock 
as  low  as  40,  realizing  immense  profits  on  both 
sides  of  the  deal. 

It  was  Woerishofler,  too,  who  pricked  the  famous 
Northern  Pacific  bubble  which  was  inflated  to  such 
size  and  gorgeousness,  that  men  of  millions  bowed 
to  it.  He  had  been  a  bull  on  the  Villard  stocks 
until  prices  had  advanced  out  of  all  proportion  to 


80  STOCK 

their  intrinsic  value.  Then  he  sold  out,  turned  to 
the  short  side,  and  got  the  appellation  of  "  The 
Great  Bear,  Ursa  Major." 

Woerishoffer  declared  that  the  earnings  of  the 
Northern  Pacific  and  the  Oregon  Companies  did 
not  warrant  the  fancy  price  at  which  their  stocks 
were  quoted  ;  and  he  openly  sold  the  whole  line 
short.  Arguments  having  no  weight,  it  was  deter- 
mined to  whip  him  into  line,  and  a  syndicate  was 
formed  to  buy  up  100,000  shares  to  squeeze  him 
out  of  the  way. 

The  financial  powers,  like  D.  O.  Mills,  Drexel, 
Morgan  &  Co.,  and  others  of  influence,  were  with 
Villard.  Practically,  he  had  to  face  them  single- 
handed.  His  own  friends  assured  him  he  was 
atop  of  a  volcano. 

The  syndicate  put  in  its  work  and  bought  20,000 
of  the  100,000  shares.  Still  Woerishoffer  did  not 
scare  worth  a  cent.  Then  with  a  rush  they  bid 
for  the  other  80,000  shares.  Their  order  was 
filled.  Woerishoffer's  brokers  filled  it  with  stock 
bought  for  that  special  purpose. 

It  was  a  dazed  syndicate  that  met  afterwards 
to  talk  matters  over.  But  not  so  dazed  as  they 
became  soon  after  when  the  Street  began  to  wake 
up  to  the  true  inwardness  of  the  situation,  and  the 
astute  financiers  found  themselves  involved  in  a 
panic,  with  the  prices  of  their  sugar-coated  stocks 
tumbling  down,  down,  until  Woerishoffer  had 
cleared  millions  of  dollars. 


SPECULATION.  81 

Woerishoffer  was  not  always  a  bear;  he  was 
just  as  ready  to  turn  bull  when  he  saw  great  op- 
portunities on  that  side  of  the  market.  He  and 
Cammack  were  more  feared  by  the  big  bull  leaders 
than  all  the  other  bears  on  "  the  Street." 

In  the  Vanderbilt  boom  of  1885,  on  the  con- 
summation of  the  "  West  Shore  deal,"  these  two 
bear  leaders  were  taken  into  the  confidence  of 
Vanderbilt  and  Pierpont  Morgan  and  let  into  their 
scheme.  This  was  an  adroit  move  to  make  allies, 
and  checkmate  the  most  formidable  opposition 
they  would  otherwise  have  had  to  encounter. 

Cammack  and  Woerishoffer  covered  their  shorts 
and  went  heavily  long  of  the  market.  In  the  30 
points'  rise  which  followed  both  made  immense 
profits.  Woerishoffer's  was  said  to  have  been 
$2,000,000. 

H.  N.  Smith  was  left  out  of  the  deal,  and  after 
a  small  advance  he  went  heavily  short  of  the 
Vanderbilt,  Granger,  and  other  stocks.  The  re- 
sult was  that  Smith  went  under,  in  the  fall  of 
1885,  for  over  $1,000,000,  and  carried  the  house  of 
William  Heath  &  Co.  down  in  the  crash  with  him. 

At  one  time  Woerishoffer  was  short  of  Lacka- 
wanna and  S.  V.  White  heavily  long  of  it.  Cir- 
cumstances favored  a  big  decline  in  the  coal  stocks 
and  White  wanted  to  get  out.  He  knew  if  it  be- 
came bruited  about  that  he  was  throwing  over 
his  long  stock,  all  the  bears  in  '•  the  Street  "  would 
jump  on  it  and  the  price  would  drop  rapidly. 
7 


82  STOCK 

"  Lack."  was  White's  pet  specialty,  and  the  pub- 
lic knew  it.  They  knew  he  made  the  bears  climb 
for  it  when  opportunity  offered  for  a  corner.  Hence 
they  did  not  fear  short  sales  of  it,  but  did  fear 
liquidation. 

So  White  had  his  stock  sold  through  the  bear 
house  of  Woerishoffer  instead  of  selling  it  directly 
from  his  own.  It  was  said  that  80,000,  equivalent 
to  40,000  full  shares,  was  so  sold  in  one  day,  with- 
out much  appreciable  effect  on  the  price.  White, 
it  was  reported,  cleared  $1,000,000. 

The  public  believed  it  was  short  stock  Woeri- 
shoffer &  Co.  were  selling.  When  it  became  known, 
a  day  or  two  after,  that  it  was  long  stock,  sold  by 
the  chief  bull  in  it,  the  price  dropped  like  lead. 

No  business  is  more  heartless  than  stock  specu- 
lation, yet  Woerishoffer's  generosity  was  proverb- 
ial. His  clerks  were  the  envy  of  every  office  in 
"  the  Street."  He  spent  thousands  of  dollars 
every  month  in  helping  other  men. 

At  his  death  he  was  practically  the  owner  of 
over  20  seats  in  the  Stock  Exchange — worth  at 
least  $25,000  a  piece.  These  all  went  to  their 
present  owners  as  out  and  out  gifts  to  young 
brokers  whom  he  had  found  faithful  to  his  inter- 
est. 

On  Christmas,  1885 — and  it  was  not  excep- 
tional— he  distributed  one  thousand  dollar  checks 
in  his  offices,  gave  District  Messenger  boys  twenty 
dollar   and   fifty   dollar  greenbacks,    and    sent  a 


SPECULA  TION.  83 

handsome  $500  horse  as  a  present  to  the  cabby 
who  drove  him  up  and  down  town  daily. 

He  was  one  of  the  very  few  favorites  of  fortune. 
All  his  money  was  made  by  his  own  exertions — 
and  made  in  Wall  Street. 

POOR  VS.   RICH. 

Woerishoffer's  generosity  was  exceptional  among 
Wall  Street  men. 

The  selfishness  of  the  very  rich,  and  the  open- 
handed  liberality  of  people  of  moderate  means, 
and  the  very  poor,  was  never  more  strikingly 
illustrated  than  in  the  popular  contributions  to 
the  "  World  Pedestal  Fund  "  for  the  erection  of  a 
fitting  resting  place  for  the  great  Bartholdi  Statue, 
"  Liberty  Enlightening  the  World." 

The  freedom-loving  people  of  France  contribu- 
ted of  their  means  to  build,  and  the  patriotic 
Bartholdi  nearly  bankrupted  himself  to  complete 
his  conception  of  this  famous  statue  and  make  it 
a  free  gift  to  our  great  Republic. 

A  committee  of  millionaires,  bankers,  capital- 
ists and  men  of  high  standing  had  long  before 
been  organized  to  receive  subscriptions  from  other 
people.  But  precious  few  of  them  were  willing  to 
go  deep  down  into  their  own  pockets  for  substan- 
tial tokens  of  their  appreciation  of  the  great  gift 
and  to  set  an  example  of  patriotism. 

To  provide  a  pedestal  and  have  it  completed  in 
time  became  a  question  of  honor.       ^-s=*==*=-=^ 

J  OF  THE 

(  "UNIVERSITY 


84  STOCK 

The  time  was  approaching  for  the  free  transport 
of  the  "  Goddess  ;"  by  courtesy  of  the  French 
Government,  on  one  of  its  own  war  ships. 

A  hundred  thousand  dollars  was  needed  to 
complete  the  pedestal.  The  money  bag  commit- 
tee gave  up  the  task  in  despair,  and  proclaimed 
their  inability  to  raise  the  money. 

Then  it  was  that  the  Hon.  Joseph  Pulitzer, 
editor  of  the  World,  took  up  the  matter  with  the 
determination  of  raising  the  money  forthwith  by 
popular  subscription. 

Mr.  Pulitzer  headed  the  list  with  $1,000:  Pierre 
Lorrilard,  the  millionaire  tobacconist,  followed 
with  another  $1,000. 

Among  Wall  Street  men,  Hon.  R.  P.  Flower 
gave  $650,  and  Henry  Clews  gave  a  handsome 
contribution.  But  other  than  these,  Wall  Street 
was  hardly  a  factor  in  the  growth  of  the  fund. 

The  real  patriotism  of  the  American  people 
showed  itself  grandly  in  contributions  from  those 
in  very  moderate  circumstances:  from  laboring 
men  and  women  ;  from  poor  clerks,  shop  girls,  and 
children  in  the  public  schools.  Even  the  news- 
boys and  boot-blacks  on  the  streets  contributed 
pennies  from  their  rags  and  penury,  until  in  a  few 
months  the  fund  had  swelled  to  the  magnificent 
sum  of  $106,000,  and  represented  about  120,000 
individual  contributors. 


SPECULA  T/OJV.  Ss 


CHAPTER   XII. 

SHORT   SALES  DANGEROUS. 

AS  long  as  margin  gambling  in  stocks  is  the  rule 
the  bears  are  useful  as  well  as  the  bulls. 

The  former  work  to  ascertain  the  vulnerable 
points  in  the  management  of  the  railway  compa- 
nies. The  greater  the  weakness  they  discover 
the  more  favorable  their  opportunity. 

The  professional  bears  act  intelligently  on  the 
information  they  have  obtained.  They  first  sell 
large  lines  of  short  stock  at  the  highest  prices. 
Then  they  begin  to  expose  the  real,  or  apparent 
rottenness  they  have  discovered,  sell  more  stocks 
and  hammer  down  the  market. 

Speculators  on  weak  margins  are  the  first  to 
take  alarm  and  get  out,  or  are  wiped  out. 

When  investors  have  become  frightened  into 
liquidation,  the  bears  can  stop  selling.  Prices 
decline  without  their  help  by  force  of  the  reams 
upon  reams  of  stocks  pressed  on  the  market  for 
sale.  This  gives  the  wise  bruins  the  opportunity 
to  buy  in  stocks  at  low  prices  to  cover  their  shorts 
and  take  their  profits. 

But  all  this  time  a  class  of  people  have  been 
buying  the  stocks  on  the  way  down.     Many  buy 


86  STOCK 

only  to  throw  their  stocks  over  again  at  a  loss. 
Others  who  have  bought  after  a  big  decline  have 
an  object  in  view. 

If  the  bears  are  too  greedy,  have  overstayed 
their  market,  and  stocks  have  become  concen- 
trated in  the  hands  of  strong  manipulating  bulls, 
the  bears  are  not  unfrequently  caught  napping 
and  lose  all  their  advantage. 

The  bulls  form  pools  and  suddenly  put  up 
prices.  The  bears  are  squeezed,  cornered  and 
made  to  climb,  at  advancing  prices,  to  recover  the 
stocks  they  sold.  Obstinate  bruins,  who  hold 
out,  are  made  to  pay  a  heavy  loaning  rate  from 
day  to  day,  and  the  result  is  often  a  big  loss  in- 
stead of  a  profit. 

It  is  the  concentration  of  stocks  in  strong  hands 
and  the  cohesion  among  bulls  and  bull  pools  that 
makes  short  sales,  at  times,  as.  dangerous  as  dyna- 
mite. 

COMPARATIVE-    SAFETY. 

When  prices  are  high  the  bears  sell  stocks  as 
feelers  of  the  market.  If  things  favor  the  bulls 
they  cover  quickly  at  minimum  losses  and  bide 
their  time. 

After  an  advance  of  20,  30,  or  40  per  cent,  from 
the  bottom  of  a  previous  decline,  the  chances  are 
nine  out  of  ten  that  prices,  will  go  down  rather 
than  go  up.  The  bears  count  on  this  and  aim  to 
be  in  the  swim  when  the  right  time  comes. 

The   bulls,  with    no    opposition  to    encounter, 


SPECULATION.  87 

would  inflate  prices  prodigiously  beyond  real 
intrinsic  value.  When  a  great  speculative  craze 
is  on,  tha  outsiders  always  come  in  at  the  top, 
and  push  prices  still  higher  by  wild  purchases. 
This  is  the  opportunity  of  the  inside  bulls  to  sell 
out  at  enormous  profits  and  turn  to  the  bear  side. 

The  public  always  "  get  left,"  and  get  left  all 
the  worse  if  they  follow  their  banker's  advice  to 
"hold  on  "  from  top  figures.  It  was  all  planned 
in  advance  that  the  public  were  to  take  the  losses 
while  the  insiders  got  away  with  the  profits. 

When  stocks  have  become  widely  distributed  in 
the  hands  of  the  general  public  all  over  the  country, 
there  is,  and  can  be,  no  concentration,  no  cohe- 
sion and  no  defense  against  the  destruction  of 
values  by  the  bears,  who  have  everything  their 
own  way.  They  are  in  clover  and  can  gorge  them- 
selves with  honey.  The  bees,  who  fret  and  fume 
at  their  losses,  cannot  even  turn  and  sting  their 
tormentors  until  such  time  as  prices  get  low  enough 
to  tempt  others  to  purchase  for  an  advance. 

It  is  the  wide  distribution  of  stocks  in  weak 
hands  that  makes  short  sales  comparative  safe. 

An  experienced  broker,  speaking  of  the  danger 
of  shorting  the  market,  told  the  writer  "  He  had 
seen  all  of  the  great  bears,  from  Daniel  Drew  down, 
go  under  in  irretrievable  ruin,  except  W.  R. 
Travers  and  Addison  Cammack." 

The  broker  might  also  have  excepted  Charles 
F.  Woerishoffer,  the  greatest   bear    of   them    all, 


88  STOCK 

since  Drew's  time.  Woerishoffer  took  terrific 
risks,  but  died  in  the  very  zenith  of  success.  Had 
he  lived  and  continued  his  speculative  career,  he 
would  have  belied  all  the  traditions  and  antece- 
dents of  "  the  Street  ■'  had  he,  too,  not  been  swept 
under  by  a  financial  whirlwind. 

Cammack,  while  a  bold. operator,  is  cautious  and 
wary,  and  probably  never  took  half  the  risks 
Woerishoffer  was  accustomed  to. 


SPECULA  TION.  Sg 


CHAPTER  XIII. 

WALL   STREET  VICISSITUDES. 

TO  illustrate  the  hold  which  Wall  Street  has  on 
those  who  have  once  become  its  votaries: 
Men  are  subject  through  years  of  varying  fortunes 
to  vicissitudes  from  which  one  would  think  they 
would  be  glad  to  escape.  Perhaps  one  out  of  ten 
thousand  begins  with  almost  nothing  and  becomes 
a  millionaire,  and,  not  satisfied,  goes  on  until  once 
more  he  is  as  poor  as  when  he  began. 

One  man  came  to  New  York  in  1864,  and  was 
drawn  into  speculative  enterprises.  He  was 
swamped  in  the  Fort  Wayne  corner,  and  left 
entirely  without  means. 

Necessity  prompted  him  to  open  an  office,  and  at- 
tempt what  was  then  called  a  curbstone  brokerage 
business.  Subsequently  he  joined  the  open  Board 
of  Brokers.  It  was  before  the  time  of  a  ticker  ser- 
vice, and  he  was  the  first  to  inaugurate  the  system 
of  furnishing  quotations  to  prominent  operators  by 
means  of  pads.  In  this  way  he  secured  the  pa- 
tronage of  leading  speculators  like  Daniel  Drew 
and  Henry  Keep. 

He  became  in  time  a  great  banker  and  the  con- 
fidential broker  of  Jay  Gould,  "  Jim  "  Fisk  and 


go  STOCK 

others,  and  was  prominent  in  the  "  Black  Friday  " 
operations  in  1873. 

His  activity,  industry  and  thorough  integrity 
gained  him  a  numerous  clientele,  and  for  many 
years  thereafter  he  was  intrusted  with  some  of  the 
most  important  transactions  made  in  the  "  Street." 
It  was  well  understood  that  neither  for  fear  nor 
favor  could  any  information  be  obtained  from  him 
by  even  his  most  valuable  customers  as  to  the 
operations  he  might  be  conducting  for  others. 

To  the  implicit  confidence  in  his  integrity  his 
success  was  attributed.  His  house  became  one  of 
the  best  known  on  the  Street,  and  he  had  branch 
offices  at  both  London  and  Paris. 

In  the  great  boom  of  1885,  based  on  the  "  West 
Shore  deal,"  almost  all  the  big  operators,  except 
Cammack  and  Woerishoffer,  and  the  whole  Street 
were  in  the  dark  as  to  the  great  movement  inau- 
gurated by  the  late  W.  H.  Vanderbilt  and  J.  Pier- 
pont  Morgan. 

The  banker's  office  became  the  headquarters  of 
the  bears,  who  put  out  large  lines  of  shorts,  in 
blissful  ignorance  that  the  rise  had  only  just 
began. 

As  prices  were  pushed  up  and  kept  on  the  ad- 
vance, this  house,  true  to  the  interest  of  its  custom- 
ers, held  on,  in  hopes  the  boom  would  exhaust 
itself.  But  the  sequel  proved  that  their  own 
margins  and  that  of  their  largest  customer  were 
exhausted. 


SPECULATION.  91 

The  failure  of  the  house  was  inevitable,  and  it 
came  in  October.  The  cause  was  ascribed  to 
the  heavy  short  interest  they  were  carrying  for  a 
large  bear  operator,  who  got  into  them,  in  Wall 
Street  phrase,  to  the  extent  of  over  a  million 
dollars. 

Although  it  was  known  that  this  house  was 
notoriously  short  of  stocks,  their  failure  was  en- 
tirely unexpected,  and  excited  astonishment. 

The  banker  was  arrested  under  proceedings 
instituted  by  one  of  his  principal  creditors  for  the 
recovery  of  nearly  half  a  million  dollars.  Exor- 
bitant bail  was  required,  which  he  was  unable  to 
furnish,  and  he  was  committed  to  Ludlow  Street 
Jail,  where  he  remained  two  or  three  months. 
Then  the  bail  was  reduced  to  a  reasonable  figure, 
sureties  were  obtained  and  he  was  released. 

In  the  days  of  his  prosperity  this  man  had 
numerous  and  powerful  friends,  but  in  adversity 
they  all  left  him.  His  health  was  impaired  by 
long  confinement,  his  heart  broken  by  the  collapse 
of  his  fortune,  the  desertion  of  friends,  and  the 
troubles  in  which  his  fidelity  to  his  customers  had 
entangled  him.  He  died  the  next  Spring  of  dis- 
ease aggravated  by  mental  and  pecuniary  trou- 
bles. 

In  his  halcyon  days  he  was  a  live  lion  in  finance, 
in  adversity  he  was  but  as  a  dead  dog. 

The  banker  had  a  costly  residence  on  Fifth 
Avenue,  an  elegant  chateau  in  France,  and  could 


92  STOCK 

have  retired  any  time  within  a  few  years  of  his 
failure,  with  probably  a  million  of  dollars  or  more. 

"  What's  this  nigger  doing  in  my  pew  ?" 

The  banker  had  driven  down  to  his  fashion- 
able church  from  his  fashionable  brown-stone 
house  in  a  fashionable  street,  and  as  he  sauntered 
up  the  aisle,  escorted  by  the  sexton,  that  was  what 
he  said  to  him  as  he  saw  a  well  dressed  colored 
man  praying  with  bowed  head,  in  his  softly  cush- 
ioned pew. 

"  He's  a  nigger,  to  be  sure,"  whispered  the 
fawning  sexton,  as  he  opened  the  door  of  the  pew, 
"but  he's  worth  a  cold  half  million." 

"  Introduce  me  to  the  gentleman,"  instantly 
responded  the  banker  ;  "  I  shall  be  happy  to  know 
him." 

That  is  Wall  Street  all  over. 

The  god  of  Wall  Street  is  Mammon  ;  money  is 
its  idol.  Men  bow  down  in  homage  to  the  "-Gold- 
en Calf."  In  no  other  place — in  no  other  busi- 
ness is  the  world  so  cold,  cynical  and  heartless  in 
the  presence  of  misfortune. 

MORALITY,  BULLS  VS.  BEARS. 

The  general  disposition  is  to  regard  the  misfor- 
tunes of  a  bear  operator  as  a  just  punishment  for 
his  method  of  dealing.  This  is  absurd,  for  the 
bulls  are  just  as  culpable  in  their  methods  to  filch 
money  away  from  other  people  as  are  the  bears. 

The  bear  is  the  conservator  of  the  stock  market. 


SPECULA  TION.  93 

He  acts  as  the  governor  of  the  steam  engine,  and 
lifts  the  safety  valve  when  the  steam  gets  too 
high: 

It  is  his  pleasure  and  practice  to  analyze  values; 
to  restrain  the  propensity  of  the  bull  to  look  at 
everything  through  a  magnifier;  to  counsel  cau- 
tion and  to  discover  the  two  sides  that  exist  to 
everything,  even  to  a  railroad  company's  state- 
ments. 

More  important  still,  when  the  bulls  have  over- 
loaded and  the  market  has  become  blind  drunk 
with  high  prices,  it  is  the  bear  who  steps  in  and 
prevents  the  panic  which  would  ensue  at  an 
attempt  to  realize  profits. 

He  slowly  prepared  for  what  he  saw  must  occur 
from  the  mad  speculation  going  on,  by  selling  as 
prices  advanced,  and  then  when  there  is  no  one 
else  to  buy,  he  checks  the  downward  movement 
by  buying  what  would  otherwise  be  unsalable, 
thus  saving  many  a  speculator  from  absolute  ruin 
and  many  a  money  lender  from  being  compelled 
to  become  the  owner  of  the  securities  on  which 
he  had  loaned  money. 

It  is  not  uncommon  to  hear  the  bull  speculator 
denounce  the  practice  of  the  bear  in  selling  that 
which  he  does  not  own  ;  but  it  is  difficult  to  see 
wherein  this  is  worse  than  for  the  bull  to  buy  that 
which  he  cannot  pay  for. 

The  bulk  of  all  transactions  in  stocks  are  made 
on  margins.     If  a  rise  in  price  follows  a  purchase, 


94  STOCK 

the  buyer  takes  advantage  of  it  and  makes  money, 
but  if  a  severe  decline  occurs  and  more  margin  is 
not  forthcoming,  that  which  he  has  already  de- 
posited to  secure  his  broker  is  wiped  out,  and 
another  lamb  is  slaughtered. 

The  bulls  sometimes  resort  to  the  trick  of  man- 
ipulating a  scarcity,  of  stock,  in  the  loan  room. 
This  is  done  to  carry  the  idea  that  there  is  a  large 
short  interest  out,  in  hopes  it  will  induce  pur- 
chases,in  anticipation  of  prices  being  ptit  up  on  a 
squeeze  of  the  bears.  Under  cover  of  such  buying 
they  will  sell  out,  and  leave  their  dupes  in  the 
lurch.  The  whole  thing  is  a  cheat.  There  is  no 
big  short  interest.  Stocks  are  plenty  to  go  around 
and  to  spare,  except  for  their  trickery. 

Wall  Street  is  full  of  mines  and  countermines, 
traps  and  drag-nets  to  catch  suckers.  The  dabbler 
is  in  a  strait  betwixt  Scylla  and  Charybdis,  and  in 
danger  of  being  wrecked  whichever  way  he  turns. 
Between  the  traps  of  the  bulls  and  those  of  the 
bears  there  is  no  choice  but  to  keep  out  of  both, 
unless  one  buys  good  stocks  at  a  reasonable  price, 
pays  for  them,  and  is  able  to  hold  on  to  them  for 
years  for  results,  if  necessary. 

DANGEROUS    STOCKS   TO    SHORT. 

Stocks  which  have  a  comparatively  small  capi- 
talization are  particularly  dangerous,  for  the  rea- 
son that  the  floating  stock  is  more  easily  corraled 
and  a  corner  effected. 


SPECULA  TION.  95 

The  Long  Island  Railroad  is  capitalized  at 
$10,000,000.  Nobody  ever  hears  of  the  bears 
selling  that  stock  short.  The  reason  is,  the  stock 
is  concentrated  in  a  few  strong  hands,  and  it  can 
be  cornered  quickly  and  the  price  run  up  at  a 
jump  from  par  to  $1,000  a  share,  or  any  other 
figure. 

Pacific  Mail  has  a  stock  capital  of  $20,000,000 
par  value.  It  is  very  hazardous  to  go  short  of  it 
unless  the  stock  is  widely  distributed. 

Delaware,  Lackawanna  and  Western  is  a  half 
share  stock.  Its  par  is  50,  and  its  capital  is 
$26,200,000.  This  stock  was  formerly  the  great 
objective  point  for  bear  assaults,  for  the  reason 
that  it  then  made  no  public  statements,  and  specu- 
lators had  to  grope  in  the  dark  as  to  its  real  con- 
dition and  value. 

It  has  paid  dividends,  then  passed  them,  and 
then  resumed  their  payment  again.  From  1882 
to  1885  it  paid  8  per  cent,  per  annum.  Since 
then  it  has  paid  7  per  cent.  Its  price  from  1880 
to  the  present  time  has  ranged  between  68^  and 
!5°i  Per  fuU  share. 

From  fifteen  to  twenty  millions  of  this  stock  is 
generally  held  closely  by  investors  for  the 
dividends,  while  the  balance  is  floating  on  the 
Street,  the  football  of  speculation. 

It  was  very  easy  for  bull  capitalists  to  buy  up 
the  floating  stock,  when  the  bears  were  heavily 
short,  and  effect  a  corner. 


g6  STOCK 

111  1884  the  pool  in  Lackawanna  put  up  the 
price  from  114J  to  I33i  " regular."  In  the  height 
of  the  squeeze  a  loaning  rate  of  4  per  cent.,  or  $4 
per  full  share  per  day,  was  exacted.  So  large  was 
the  short  interest  and  so  eager  were  the  bears  to 
recover  the  stock  they  had  sold,  that  they  run  the 
prices  up  on  themselves  from  133-J  "regular,"  to 
I39i  f°r  u  casn  "  stock  for  immediate  delivery. 

Union  Pacific  has  a  stock  capital  of  $60,868,500 
par.  When  this  stock  was  paying  7  per  cent, 
dividends  probably  fifty  millions  was  held  by  in- 
vestors. The  balance  was  floating  on  the  Street. 
It  was  not  an  easy  matter  to  corner  it.  Still  it 
has  been  cornered,  and  a  loaning  rate  of  -J  or  \  per 
cent,  per  day  imposed. 

Western  Union  Telegraph  has  a  par  capital  of 
$80,000,000,  and  it  is  plain  to  see  that  it  would 
require  a  very  powerful  combination  of  capital  to 
buy  up  control  and  corner  it. 

This  stock  has  the  reputation  of  having  been 
immensely  watered.  It  used  to  be  charged,  again 
and  again  by  the  bears,  that  the  whole  plant,  wires, 
poles,  electrical  instruments  and  all  could  be  dupli- 
cated for  $20,000,000. 

THE  GREAT  NORTHWEST  CORNER. 

The  preferred  stock  of  the  Chicago  and  North- 
western is  entitled  to  7  per  cent,  dividends  before 
the  common  stock  can  get  anything.  For  several 
years  both  classes  of  stock  were  paying  7  per  cent.. 


SPECULA  TION.  97 

and  accumulating  a  surplus.  "  The  cutting  of  the 
Northwest  melon  "  in  the  division  of  this  surplus 
as  extra  dividends  became  a  standing  joke,  and 
was  used  as  an  argument  to  bull  the  stock. 

The  difference  in  price,  at  market,  between  the 
preferred  and  common  stock  is  usually  from  15  to 
30  per  cent. 

In  October,  1872,  Northwest  common  ranged  in 
price  from  68-J  to  83 f,  and  the  preferred  from  84! 
to  90. 

In  November  of  that  year  occurred  the  great 
Northwest  corner,  in  which  the  common  stock 
was  put  up  from  Jji  to  $230  a  share,  and  proba- 
bly a  very  high  loaning  rate  imposed  on  it. 

During  the  squeeze  the  highest  price  of  the 
preferred  stock  was  only  102.  One  prominent 
bear,  who  was  heavily  short  of  the  common,  at- 
tempted to  make  his  deliveries  in  preferred  stock, 
which  was  refused.  He  had  to  dance  to  anything 
but  a  merry  tune  in  settling  up  his  contracts.  In 
December  following  the  price  of  Northwest  com- 
mon dropped  back  to  90  and  8i-J. 

THE   HARLEM   CORNER. 

In  1863  Harlem  stock  ranged  at  all  prices  from 
27i  to  $179  a  share. 

In  1864  Commodore  Vanderbilt  put  up  the 
price  until  in  June  it  was  held  at  $285  a  share,  and 
did  not  appear  in  the  market  quotations  for  a  long 
time  afterwards. 

8 


9^  STOCK 

The  Fort  Wayne  corner  occurred  in  April,  1864, 
when  the  price  was  put  up  to  I52f.  The  highest 
average  price  for  that  year  was  1  16J  and  the  low- 
est 98J-  per  share. 

THE   GAME    OF   CHANCE. 

Stocks  are  always  dear  to  the  outside  public 
when  prices  are  low  and  distrust  prevails.  If  they 
are  bound  to  speculate,  this  is  the  very  time  when 
they  ought  to  buy  for  a  "  long  pull."  But  they 
have  no  confidence  and  will  not  come  in. 

When  a  great  movement  has  been  projected, 
and  the  bubble  has  become  inflated  near  its 
utmost  tension,  then  it  is  that  stocks  look  cheap. 
People  are  imbued  with  the  belief  that  the  extent 
of  the  rise  has  no  limit.  They  rush  in  to  buy  and 
are  supplied  by  the  insiders,  who  have  planned  for 
just  such  a  consummation.  The  result  is  they  get 
left.  Twenty,  thirty  or  forty  per  cent,  margins 
are  wiped  out.  Or,  if  financially  strong,  they  have 
to  wait  years,  perhaps,  for  another  boom  to  come 
round  to  let  them  out  whole. 

The  saying,  "A  fool  is  born  every  minute,"  is 
said  to  have  originated  with  one  of  the  most 
prominent  operators  in  Wall  street.  Certain  it  is 
that  a  new  crop  of  fools  is  always  counted  upon 
and  seldom  fails  to  respond  to  the  allurements 
offered. 

The  position  of  those  who  buy  stocks  near  the 
top  of  a  boom   was  never  better  illustrated  than 


SPECULA  TION.  99 

in  the  "  Wall  Street  "  column  of  the  Evening 
Telegram  of  November  21,  1885.  Speaking  of 
the  great  rise  based  on  the  "  West  Shore  deal," 
it  says  : 

"  To  attempt  to  reason  on  the  present  phase  of 
speculation  in  Wall  Street  is  futile.  It  must  be 
taken  for  just  what  it  is,  a  simple  credulity  that  to 
buy  to-day,  no  matter  what  insures  a  profit,  all 
the  greater  the  longer  a  sale  is  deferred. 

People  buy  stocks  to-day  with  the  same  unwav- 
ering faith  with  which  a  'darkey'  invests  the 
products  of  a  day's  boot-shining  in  4-1 1-44,  and 
with  about  the  same  substantial  grounds  for  cal- 
culating on  a  profit  on  his  venture. 

It  is  splendid  sport  as  long  as  it  holds  out.  No 
one  suffers :  every  one  with  sufficient  courage  to 
take  a  '  flier  '  gains.  The  t>ears  are  living  on  last 
year's  nuts,  or  sucking  their  paws  for  such  nour- 
ishment as  they  may  afford.  Seats  at  the  Stock 
Exchange  are  rising  in  value.  The  nearly  fam- 
ished brokers  of  a  year  ago  are  waxing  fat  and 
saucy.  Diminished  bank  accounts  are  growing 
plethoric  again.  The  pleasant  bleat  of  the  saga- 
cious lamb  is  heard  as  a  sort  of  chorus  to  the 
clink  of  gold  as  he  counts  over  his  profits  and  says 
to  himself,  'This  is  no  vision  of  fancy.  This 
sweet  clover  and  that  high  grass  have  come  to 
stay.  I  shall  soon  have  as  much  fat  on  my  ribs 
and  wool  on  my  back  as  will  make  me  comforta- 
ble, so    buy  me  a  thousand  more  of  anything,' 


ioo  STOCK 

and  his  broker  pockets  the  $125  commission  and 

the  lamb    has   pledged    another   hostage   in   the 

hands  of  chance. 

True,  this  state  of  things  may  change.     Similar 

conditions   have    existed   before    this,    and   have 

changed,  and,  strange  to  say,  the  sagacious  lamb 

has   not  foreseen  it.     He  has  almost   invariably 

been  caught  in  deshabille,  so  to  speak,  and  the 

joyful  bleat  is  changed  to  a  pitiful  moan.     His 

broker  ignores  him  if  he  is  not  left  in  his  debt ; 

his  friends  jeer  at  him  ;  and  though  Sterne  says 

that  the   '  Lord   tempers  the  wind  to  the  shorn 

lamb/  one  has  only  to  look  around  Wall  Street 

after  a  panic,  to  see  how  false  the  saying  is — for 

the  Lord  don't  do  anything  of  the  kind.     On  the 

contrary,  the  bears  come   out  of  the  woods,  as 

they  did  in  Elijah's  time,  and  treat  the  lambs  as 

in  those  days  they  treated  the  wicked  boys,  with 

the  unanimous  Christian  verdict  of  "  Served  him 

right. 

*  *  *  #  *•  * 

The  result  of  an  attempt  to  liquidate  these  ac- 
counts could  not  fail  to  be  disastrous,  and  once 
again  the  voice  of  the  mourner  will  be  heard 
in  the  land — the  lambs  weeping  for  their  profits, 
and  '  refusing  to  be  comforted  because  they  are 
not.' 

The  projectors  of  this  movement,  so  unprece- 
dentedly  successful,  have  realized  on  their  ven- 
tures beyond  question,  and  now  stand  aside  to 


SPECULA  TION.  I o I 

watch  the  bursting  of  a  bubble  which  has  ex- 
panded far  beyond  their  most  sanguine  expecta- 
tions. 

When  this  has  taken  place,  and  the  smoke 
cleared  from  the  field  of  battle,  so  that  the  dead 
can  be  counted  and  the  wounded  placed  in  hos- 
pital, it  will  be  in  order  for  new  deals  to  be  organ- 
ized, when,  with  new  scenery,  dresses  and  decora- 
tions, the  same  old  play  will  be  revived — or,  more 
correctly,  the  same  old  contest  be  fought  over. 
Unlimited  capital,  skill  in  manipulation,  plausible 
pretexts  with  just  enough  truth  at  the  bottom  to 
swear  by,  respectable  names  to  indorse  projects  of 
promise  rather  than  of  performance  on  the  one 
side  and  blooming  verdancy  on  the  other,  and  the 
same  result — slaughtered  lambs,  not  forced  to  the 
shambles,  but  coaxed  in,  lured  to  their  destruc- 
tion by  those  whose  colossal  fortunes  and  princely 
edifices  are  cemented  by  the  blood  of  these  "  in- 
nocents. 

They  cannot  say  that  they  have  not  been 
warned.  '  They  have  heard  it,  but  they  heeded 
not/  " 


102  STOCK 


CHAPTER  XIV. 

WALL  STREET   SPECULATORS. 

JASON,  of  old,  sailed  along  the  shores  of  Far 
Cathay  and  the  ancient  Colchis  in  search  of 
the  Golden  Fleece,  but  could  never  find  it. 

The  adventurers  who  navigate  the  dangerous 
coasts  of  Wall  Street  on  a  similar  mission  are 
scarcely  more  successful. 

They  number  a  vast  multitude  of  both  sexes, 
and  come  from  all  quarters  of  the  compass.  Every 
business  day,  between  9  and  10  o'clock  A.  M.,  the 
Brooklyn,  Staten  Island  and  Jersey  ferry  boats, 
the  elevated  trains  and  horse  cars  are  full  of 
them. 

They  come  from  way  off  on  Long  Island,  from 
far  away  in  New  Jersey,  from  the  Hudson  River 
towns  and  villages  and  south-western  Connecticut; 
from  anywhere,  within  two  or  three  hours'  ride 
of  the  Metropolis,  by  fast  steamers  and  railway 
trains. 

Broadway  and  the  adjacent  streets  are  alive 
with  them,  all  making  for  a  common  goal,  their 
bankers'  and  brokers'  offices.  Dives  comes  down 
in  his  private  carriage,  or  in  a  hired  coupe,  away 
from  the  common  herd. 


SPECULATION.  103 

Inside  the  offices  they  feel  at  home,  inspect  the 
Wall  Street  papers  and  news  tape  for  the  latest 
information.  They  consult  their  brokers  or  wran- 
gle with  each  other  on  the  prospects  of  the  day ; 
for  there  are  both  bulls  and  bears  in  the  same 
office. 

At  10  o'clock  they  congregate  around  the  ticker, 
eager  for  the  opening  quotations  on  which  to  base 
their  orders  for  the  morning.  They  hang  over  the 
indicator  by  the  hour  and  scan  every  fluctuation. 
Business  lasts  from  10  A.  M.  to  3  P.  M.,  contin- 
uously. 

The  tape  speculators  are  there  as  regularly  as 
the  bankers,  brokers  and  clerks.  In  aggregate 
numbers,  they  would  make  up  an  army.  These, 
however,  constitute  but  a  fraction  of  another  class, 
who  are  seldom  seen  on  Wall  Street,  but  who  send 
their  orders  by  post  and  telegraph  from  up  town 
and  from  all  over  the  country. 

Those  who  manipulate  the  market  for  sure 
results  are  doubtless  happy  over  the  boodle  they 
have  drawn  into  their  coffers  by  trickery  and 
craft. 

The  bankers  and  brokers  are  happy  in  propor- 
tion to  the  frequency  and  size  of  their  com- 
missions. 

But  the  life  of  an  outside  speculator  has  far,  far 
more  of  misery  than  of  happiness. 

The  feeling  is  one  of  ecstasy  to  him  who  sees 
his  ventures  rolling  up  a  profit  of  $500  or  $1,000 


104  STOCK 

on  each  ioo  shares  he  has  out.  If  he  is  wise,  he 
will  seize  it.  If  too  greedy,  and  he  waits,  the  sub- 
stance he  coveted  vanishes  like  a  shadow,  and  per- 
haps engulfs  his  margins. 

Prices  advance  or  decline  by  fractions  of  eighths. 
Each  i  represents  a  loss  or  gain  of  $12.50  on  100 
shares.  In  an  active  market  prices  jump  up  or 
down  by  quarters,  halves  or  whole  points  at  a 
time. 

If  a  man  buys  or  sells  short  100  shares,  and  the 
market  goes  his  way  1  per  cent.,  and  he  closes  the 
deal  there,  his  broker  takes  $25  for  his  commission; 
the  balance,  $75,  is  his  profit,  less  interest,  if  any, 
for  carrying.  If  the  market  goes  against  him  1 
per  cent.,  and  he  closes  the  deal  at  that  loss,  he  is 
out  of  pocket  $125,  of  which  $100  is  loss  on  the 
stock  and  $25  commissions  on  the  turn;  in  addi- 
tion, he  is  minus  all  interest  that  may  accrue  for 
carrying  the  stock  for  him  if  he  is  long,  or  of  any 
loaning  rate  imposed  if  he  is  short. 

Speculators  may  be  divided  into  two  classes, 
those  who  deal  for  a  "  long  pull"  and  big  profits  of 
from  5  to  20  per  cent.,  and  those  who  operate  for 
scalping  profits  of  fractions  or  a  point  or  two. 

The  first  are  like  the  disciples  of  Isaak  Walton, 
who  put  out  their  lines  and  wait  patiently  for 
hours  for  a  respectable  3  or  5  pound  bass  to  take 
the  hook. 

Those  who  go  in  for  a  long  pull  wait  days, 
weeks  and  months  for   results      At  times  they 


SPECULA  TIOAT.  105 

may  have  many  hundreds  of  dollars  profit  in  sight. 
They  want  to  do  better  and  wait.  A  sudden 
change  comes  over  the  market,  the  profits  vanish, 
big  losses  accrue  to  those  on  weak  margins.  Those 
who  are  strong  hold  on  and  wait  weeks  and  months 
longer  for  the  market  to  come  around  their  way 
again. 

The  other  class  who  go  in  for  "  short  turns"  are 
like  the  fellows  who  fish  for  minnows  at  the  creek, 
for  the  fun  of  pulling  out  the  little  fish  as  fast  as 
they  can  bait  the  hook  and  throw  it  in. 

They  try  to  buy  at  the  bottom  of  the  daily 
slumps  and  sell  out  on  the  bulges,  at  profits  of 
$50,  $100,  or  $200.  The  market  may  be  run  in  a 
groove  for  days  at  a  time  with  uniform  fluctua- 
tions up  and  down,  perhaps  two  or  three  times  a 
day.  This  is  a  good  traders'  market  while  it  lasts. 
They  get  in  and  out  with  several  small  profits  of 
$100,  more  or  less,  daily.  Then  prices  are  suddenly 
moved  up  or  down,  to  a  much  higher  or  lower 
level,  generally  when  they  are  on  the  wrong  side. 
They  lose  all  their  profits,  if  not  their  margins. 

It  is  the  fate  of  most  speculators  to  get  in  wrong 
at  least  three  times  out  of  five.  The  news,  gossip 
and  often  false  rumors  circulated  have  a  subtle, 
undefinable  influence  over  the  mind,  perverting 
cool  judgment  and  discretion,  and  leading  fools 
into  a  trap  intentionally  set  for  them. 

The  hook  is  baited.  The  anglers  are  cunning 
and  powerful.     They  move  the   market   at  will. 


106  STOCK 

They  play  with  their  game  as  a  cat  plays  with  a 
mouse.  When  the  time  is  ripe,  and  there  is  a 
good  run  of  suckers,  the  net  is  drawn  in  and  the 
profits  secured. 

Success  is  everything  to  a  man  in  Wall  Street. 
The  prosperous  gambler  is  confident,  self-satis- 
fied and  don't  care  a  fig  for  the  good  opinion  of 
anybody. 

The  better  class  of  people  whose  avocations  are 
above  taint  or  suspicion  of  gambling,  look  on  the 
business  of  stock  speculation  as  disreputable  and 
demoralizing.  They  soon  come  to  know  the  Wall 
Street  men  who  pass,  at  certain  hours,  daily  on 
their  way  to  and  from  "  the  Street."  Specula- 
tors know  this  and  also  the  opinion  with  which 
they  are  regarded. 

Unlucky  speculators,  outside  the  banker-broker 
offices,  often  have  the  furtive  look  and  exhibit 
the  hang-dog  feeling  of  a  sneak  thief,  or  a  sheep 
stealer.  They  are  Wall  Street  lamb  and  they 
know  it,  and  they  think  everybody  else  knows  it 
too. 

HAPPINESS. 

About  four  years  ago  a  speculator  got  a  straight 
tip  of  a  good  thing  to  happen  in  Northwest  com- 
mon. Next  morning  he  ordered  his  brokers  to 
buy  him  1,000  shares  of  it  at  the- opening.  They 
did  so.  Northwest  advanced,  and  before  closing 
had  gone  up  over  ten   points.     Then  he  ordered 


fit  of  $10,000.     All  made  within  five  hours. 


SPECULA  TION. 


MISERY. 

Of  all  the  cliqued  stocks  none  were  more  dan- 
gerous to  go  short  of  than  Delaware,  Lackawanna 
and  Western.  It  was  equally  dangerous  to  buy, 
even  on  30  per  cent,  margins,  unless  bought  under 
par.  Its  fluctuations  for  eleven  months  in  1884-5 
were  nearly  50  per  cent.,  and  this  too  was  brought 
about  more  by  artifice  than  natural  causes. 

In  January,  1885,  its  price  was  down  around  82. 
A  speculator  bought  200,  equivalent  to  100  full 
shares,  at  about  83.  It  advanced,  and  at  88f  he 
took  profits  and  sold  200  short.  Still  the  price 
advanced,  and  at  95^-  he  sold  another  200  short  to 
average  down.  The  price  kept  going  up  with 
occasional  reactions  until  in  December  it  reached 

135- 

Now  when  a  stock  goes  "  ex-dividend "  the 
price  drops  off  just  the  extent  of  the  dividend. 
When  Lackawanna  paid  two  per  cent,  quarterly, 
if  the  price  at  market  was  120  with  the  dividend 
on,  it  would  be  118  the  moment  it  went  ex-divi- 
dend, and  be  subject  to  fluctuations  from  that 
price. 

If  a  bear  is  short  of  a  stock  when  it  goes  ex-div- 
idend, he  has  to  pay  the  dividend  to  the  man  he 
last  borrowed  the  stock  of,  to  keep  good  his  deliv- 
:ry,  when  the  dividend  was  on  it. 


I 


108  STOCK 

In  April,  1885,  the  bear  before  mentioned  had 
to  pay  $400  dividend  on  his  400  half  shares.  And 
in  July  he  had  to  pay  another  $400  dividend  on 
the  same. 

In  the  meantime  there  had  been  a  squeeze  in  it 
and  he  had  to  pay  a  loaning  rate  of  from  ^-to-j- 
per  day,  and  on  one  day  it  was  one  per  cent.,  then 
the  stock  became  easy  and  the  loaning  rate 
ceased. 

Altogether,  at  one  time,  he  stood  for  a  loss  of 
over  $5,000  on  stock,  dividends  and  loaning  rates. 

The  October  dividend  was  reduced  to  if  or  7 
per  cent,  per  annum.  He  escaped  the  payment  of 
this  by  covering  his  shorts.  Whether  he  caught 
on  short  again  is  a  matter  of  conjecture. 

Another  bear  sold  200  Lackawanna  short  at  88  ; 
200  more  at  90  ;  200  at  92  ;  200  at  95,  and  200  at 
98.  Anybody  can  imagine  the  loss  he  stood  for 
on  his  shorts  with  the  loaning  rates  and  dividends 
he  had  to  pay. 

One  bull  bought  500  shares  of  Texas  and  Paci- 
fic stock  in  1 88 1  at  65  per  share.  It  declined,  but 
he  held  on  until  1884  and  then  sold  it  for  $15  a 
share.  His  loss  was  $25,000  on  stock,  $125  on 
commissions,  and  he  lost  all  income  for  about  two 
and  a  half  years  on  the  $32,500  his  stock  cost 
him. 

Another  bull  bought  100  shares  Bloomington 
in  1882  at  44^,  and  in  1883  he  bought  100  shares 
Oregon   Trans-Continental    at    5  5-g--     Prices  went 


SPECULATION.  109 

1  on  him  until  in  1884  the  lowest  price  was  9 
and  6J-  per  share,  respectively.  He  has  the  stock 
yet,  and  the  highest  price  reached  since  has  been 
28^  for  Bloomington  and  38  for  O.  T.  Neither 
stock  pays  any  income. 

Instances  like  these  could  be  multiplied  ad  lib- 
itum, where  people,  who  bought  stocks  at  high 
prices  years  ago,  are  still  holding  on  to  their  hun- 
dreds and  thousands  of  shares  and  waiting  for  the 
coming  of  the  millennium. 

The  widest  fluctuations  of  any  one  stock  in  1884 
was  in  Bankers'  and  Merchants'  Telegraph.  In 
February  the  highest  price  was  $126.75  per  share, 
and  in  October  following  only  $1  per  share. 

The  question  arises:  Why  will  people  speculate 
at  such  fearful  risks  ? 

The  answer  is,  that  most  of  them  were  first  lured 
in  on  a  booming  market.  They  could  and  did 
snatch  frequent  profits  by  buying  on  the  reactions 
and  selling  out  on  the  rallies.  When  the  gambling 
instinct  is  once  aroused  and  gratified,  the  result  is 
they  become  the  slaves  of  infatuation,  delusion, 
credulity  and  greed.  The  business  has  a  snake- 
like fascination  which  few  of  its  victims  can  resist, 
as  long  as  they  can  raise  a  margin  to  continue  it. 

When  they  cannot  handle  a  respectable  100 
share  lot  they  go  over  to  the  Consolidated  Stock 
and  Petroleum  Exchange  and  operate  in  ten  share 
lots,  on  margins  of  from  $20  to  $100.  From  this 
they  can   drift   down   to  the  bucket  shops   and 


no  STOCK 

continue  the  game  as  long  as  they  can  raise, 
borrow  or  beg  $5,  the  lowest  limit.  " 

As  long  as  men  of  wealth  and  standing,  senators, 
congressmen,  ex-cabinet  ministers,  state  officials, 
deacons,  church  wardens,  vestrymen,  Sunday- 
school  teachers,  and  even  stray  clergymen  come 
into  the  Street  to  speculate  on  margins,  just  so 
long  will  the  business  have  an  appearance  of  re- 
spectability and  legitimacy.  Legitimate  in  law  it 
is,  but  morally  it  is  all  wrong,  and  leads  to  untold 
hardship  and  misery,  not  alone  to  the  guilty,  but 
to  multitudes  of  innocent  people. 

The  Rev.  W.  H.  Milburn,  the  blind  Chaplain  of 
the  House  of  Representatives,  on  March  22,  1886, 
"  devoted  his  opening  prayer  to  an  invocation  to 
God  to  rid  the  land  of  gamesters,  whether  in  cards, 
dice,  chips,  stocks,  wheat,  bucket  shops  or  boards 
of  trade,  and  to  lead  trje  people  to  know  that 
money  making  other  than  by  the  sweat  of  the 
face  was  contrary  to  His  laws." 

"  On  motion  of  Mr.  Butterworth,  of  Ohio,  sec, 
onded  by  Mr.  Weaver,  of  Iowa,  this  prayer  was 
ordered  to  be  inserted  in  the  minutes." 

bankers'  precautions. 

In  many  offices  tissue  letterpress  copies  of  cor- 
respondence received  or  sent  out,  written  orders 
to  buy  or  sell,  and  bills  of  purchases  and  sales  are 
taken.  Orders  in  pencil  are  often  preserved  ;  all 
this   as  a  precaution  against  future  trouble.     A 


SPECULA  TION. 


client  may  be  directly  led  into  a  bad  scrape  and  a 
heavy  loss  through  the  damnable  influence  brought 
to  bear  to  get  him  in  for  the  sake  of  commissions. 
But  this  influence  is  oral,  often  between  man  and 
man.  The  customer  is  generally  alone.  He  has 
no  redress.  If  disposed  to  fight,  the  oral  in- 
fluences don't  count  against  the  fac-simile  copies 
of  his  letters,  orders,  bills  of  purchase  or  sale,  and 
every  clerk  in  the  office  ready  to  back  up  the 
banker  and  broker  in  a  court  of  law. 


112  STOCK 


CHAPTER  XV. 

GREAT   SWINDLES,    REMOTE  AND   RECENT. 
MISSISSIPPI   SCHEME. 

IN  1679  La  Salle  discovered  the  great  district 
northwest  of  the  lower  confluence  of  the  Mis- 
sissippi River,  known  as  Louisiana,  and  which 
became  the  property  of  France. 

In  1717  John  Law,  a  celebrated  financier  and 
native  of  Edinburgh,  established  a  bank  in  Paris, 
by  royal  authority.  The  stock  was  1,200  shares 
of  3,000  livres  each,  which  soon  bore  a  premium. 

This  bank  became  the  office  for  all  public 
receipts,  and  the  same  year  there  was  annexed  to 
it  a  Mississippi  company  which  had  grants  of  land 
in  Louisiana  and  was  expected  to  realize  immense 
sums  by  planting  and  commerce. 

Law's  famous  scheme  was  a  plan  for  relieving 
the  bankrupt  French  treasury  by  parcelling  out 
the  Valley  of  the  Mississippi  among  stock  jobbers 
and  commercial  gamblers. 

Thousands  of  colonists  were  sent  out  and  a 
mania  for  speculation  seized  all  classes  of  French 
society. 

In  1 71 8  the  bank  was  declared  a  royal  institu- 
tion, and  its  shares  rose  to  twenty  times  their 
original  value. 


SPECULATION.  -    113 

The  bubble  burst  in  1720  and  the  shares  sank 
in  value  as  rapidly  as  they  had  risen,  occasioning 
widespread  financial  distress  and  bankruptcy. 

Law  fled  from  the  wrath  of  the  people,  who 
were  left  in  worse  poverty  and   misery  than  ever, 

SOUTH    SEA   BUBBLE. 

In  the  year  1720  the  South  Sea  Company,  a 
trading  corporation  of  London,  having  exclusive 
privileges,  offered  to  buy  up  the  government 
annuities  with  a  view  to  the  reduction  of  the  pub- 
lic debt. 

The  proposal  was  accepted  and  great  numbers 
of  the  people  hastened  to  invest  in  the  stock  of 
the  Company,  which  rose  to  an  extraordinary 
premium. 

It  was  a  stupendous  stock  jobbing  scheme,  and 
after  running  its  course  a  few  months  the  great 
bubble  burst. 

Merchants,  lawyers,  clergy,  physicians  and 
others  passed  from  their  dreams  of  fabulous 
wealth,  and  from  their  wonted  comforts  into  pen- 
ury. Some  died  of  broken  hearts,  others  removed 
to  remote  parts  of  the  world   and  never  returned. 

It  was  characterized  at  that  time  as  "the  most 
enormous  fabric  of  national  delusion  ever  raised 
amongst  an  industrious  and  prudent  people." 

PANIC  OF  1837. 
New  York  in  the  years   1835-6  was  the  scene  of 
wild  and,  for  that  time,  colossal  speculations.    All 
9 


H4  STOCK 

kinds  of  business  and  commerce  was  stimulated  to 
its  utmost  tension.  In  1837  occurred  the  most 
disastrous  commercial  panic  ever  known  on  the 
Western  Continent.  About  60  banks  with  over 
$150,000,000  of  liabilities  were  engulfed  in  ruin. 
Merchants  and  storekeepers  of  all  kinds  failed 
right  and  left  until  the  total  indebtedness  was  be- 
tween $400,000,000  and  $500,000,000.  It  became 
a  standing  joke  that  the  average  basis  of  settle- 
ment on  this  grand  aggregate  was  but  one  penny 
on  the  dollar.  Almost  everybody  was  in  debt  to 
somebody  else,  and  was  suing  or  being  sued,  until 
almost  this  entire  immense  sum  was  eaten  up  in 
law  costs. 

THE   EMMA   MINE. 

The  Emma  Silver  Mining  Company  originated 
in  London,  way  back  in  the  fifties  or  sixties.  The 
mine  itself  was  situated  in  the  Cottonwood  Canon, 
Utah,  about  25  miles  from  Salt  Lake  City. 

The  property  was  capitalized  at  £  1 ,000,000  ster- 
ling, and  half  the  stock  was  offered  to  the  public 
at  par  in  £20  shares.  The  other  half  was  to  be  re- 
tained for  nine  months  in  expectation  of  a  high 
premium  on  rich  developments. 

The  mine  proved  productive,  and  the  last  half 
of  the  stock  was  readily  sold  at  a  big  advance. 
Twenty-two  dividends,  the  last  in  1864,  were  paid, 
amounting  to  $1,394,400.  With  the  passing  of 
the  dividends,  the  stock  rapidly  declined,  and  al- 


SPECULA  TION.  1 1 5 

»st  went  out  of  sight  as  a  speculation.  The 
value  of  bullion  it  had  produced  was  $5,240,000. 

In  1871  the  mine  passed  into  other  hands,  and 
a  new  company  was  formed,  comprising  both  Eng- 
lish and  American  capitalists.  The  chief  promoter 
of  the  Company  was  a  noted  Englishman,  who,  in 
the  prospectus,  included  the  name  of  a  prominent 
U.  S.  official  as  a  drawing  card. 

It  afterwards  transpired  that  the  said  public 
official  was  induced  to  take  stock  and  become  a 
director  by  the  present  to  him  of  500  shares  for 
the  use  of  his  name,  and  a  salary  of  $2,500  a  year, 
which  all  the  directors  were  to  get. 

An  expert  had  been  employed  to  visit  the  mine, 
and  in  his  report  said :  "  There  were  several  facts 
which  in  his  opinion  established  beyond  all  reason- 
able doubt  the  conclusion  that  the  Emma  Mine 
was  a  true  mineral  vein  of  great  power,  and  placed 
it  in  the  category  of  the  great  mines  of  the  world. 
And  that  ore  to  the  value  of  several  millions  of 
dollars  had  already  been  removed  from  it." 

A  large  amount  of  stock  was  floated  at  ,£20  a 
share.  The  London  promoter  of  the  scheme  was 
paid  £"100,000.  An  American  banking  house  was 
paid  £"25,000  for  the  use  of  their  name,  and  the 
mine  expert  received  .£9,000  or  £"10,000  for  mak- 
ing his  favorable  report. 

Shareholders,    both    English     and    American, 


Ii6  STOCK 

prise,  because  the  United  States  public  official's 
name  was  in  the  prospectus  as  a  Director. 

Dividends  were  paid  for  thirteen  months  con- 
secutively, at  i -J-  per  cent,  per  month,  until  De- 
cember, 1872. 

Great  numbers  of  people  took  the  bait,  and 
bought  at  high  prices.  The  stock  was  boomed 
up  to  £32  per  share  in  May,  1872. 

When  the  dividends  ceased,  the  insiders  had 
sold  out  and  gone  short,  and  the  stock  had  a 
rapid  decline  to  £1  5s.  per  share. 

The  collapse  caused  great  losses  and  distress  to 
immense  numbers  of  people,  afterwards  aggravated 
by  assessments  on  the  stock,  until  at  the  close  of 
1874  these  levies  had  reached  $1,832,000.  The 
mine  had  become  exhausted  long  before. 

Subsequently  the  personal  property  of  the  Com- 
pany was  sold  under  execution,  issued  in  favor  of 
an  American  capitalist,  who  was  a  Director  of  the 
Company. 

In  1875-6  the  matter  became  the  subject  of 
Congressional  investigation,  and  resulted  in  a 
resolution  of  censure  of  the  "  public  official  "  for 
having  had  anything  to  do  with  the  mine  as  a 
Director  while  discharging  the  duties  of  his  posi- 
tion as  an  accredited  officer  of  the  Government. 

In  England  the  matter  was  taken  up  in  the 
House  of  Commons  so  far  as  it  related  to  British 
subjects. 

The  developments  raised  a  tremendous  breeze 


SPECULATION.  117 

this  country.  Many  suits  grew  out  of  the  com- 
plications, and  efforts  were  made  to  implicate  the 
late  Hon.  James  B.  McKean,  then  Chief  Justice 
of  Utah,  because  he  could  not  be  used  as  a  pliant 
tool  in  the  Emma  Mine  suits  that  came  up  before 

s  court. 


hl 


THE   CREDIT   MOBILIER. 


The  American  Credit  Mobilier,  patterned  after 
the  French  Company  of  that  name,  was  organized, 
ostensibly  to  make  loans  and  aid  Construction 
Companies. 

In  1867  the  Credit  Mobilier  Company  came 
under  the  control  of  the  contractors  who  were 
building  the  Union  Pacific  Railroad. 

Prominent  capitalists  of  New  York,  Boston  and 
other  cities  were  interested  in  it. 

For  a  time  the  Company  flourished.  About  four 
millions  of  stock  were  issued,  enormous  dividends 
were  paid,  and  it  was  made  to  appear  a  mine  of 
gold.  The  value  of  the  stock  became  greatly  in- 
flated, and,  as  usual,  the  public  grabbed  for  it,  and 
it  became  widely  distributed. 

Its  projectors  realized  fabulous  profits  selling 
out  on  the  people.  Subsequently  the  bubble  col- 
lapsed just  as  its  French  prototype  had  done  long 
before,  and  just  as  the  South  Sea  Bubble  and 
Law's  scheme  had  done  near  the  beginning  of  the 
eighteenth  century.  People  who  had  invested 
their  money  in  it  were  scooped  by  the  wholesale. 


Ii8  STOCK 

An  investigation  several  years  afterwards  reveal- 
ed the  fact  that  not  a  few  Senators  and  Congress- 
men were  interested  and  had  owned  stock  in  the 
Company. 

Charges  and  counter-charges  were  promiscu- 
ously made.  Recommendations  of  censure  and 
expulsion  were  offered. 

All  this,  locking  the  stable  door  after  the  horse 
had  been  stolen,  did  not  help  the  people  who  had 
been  fleeced  to  recover  their  money. 

The  Credit  Mobilier  scheme  had  become  so  inter- 
woven with  the  construction  of  the  Union  Pacific, 
and  as  the  building  of  the  railroad  was  promoted 
by  grants  of  land  and  other  assistance  by  Con- 
gress, it  savored  too  much  of  stock  jobbery  and 
corruption,  that  any  member  of  the  National  Leg- 
islature should  have  had  any  private  interest  in 
either  Company. 

It  was  the  great  scandal  of  the  period  and  for  a 
long  time  a  stench  in  the  nostrils  of  the  American 
people. 

Suits  in  connection  with  the  Credit  Mobilier  have 
continued  to  crop  out  in  the  Courts  even  down  to 
a  very  recent  time. 

CATTLE   RANCHES. 

Wall  Street  men  have  many  irons  in  the  fire 
outside  of  stock  speculation.  Various  land  and 
cattle  companies  have  their  head-quarters  in  New 
York  and  issue  stock  of  their  corporations. 


SPECULA  TION.  1 1 9 

Millions  of  dollars  are  invested  in  sheep  and 
cattle  raising  in  Texas    and  the    western   Terri- 

Itories.  • 

The  reservations  set  apart  for  the  exclusive  use 
of  the  Indians  are  intruded  upon  in  the  red-hot 
pursuit  of  wealth. 

In  1885  this  matter  was  made  the  subject  of 
complaint  to  the  Government  by  Gen.  Edward 
McCook,  whereupon  President  Cleveland  issued  a 
proclamation  warning  the  cattlemen  to  remove 
with  their  live  stock  from  the  reservations. 

The  only  effect  was  that*  they  did  remove  for  a 
time  and  then  came  back  again.  In  1886  the 
annual  "  round  up  "  on  the  ranges  proceeded  the 
same  as  before,  and  the  President's  proclamation 
was  ignored. 

However,  ranges,  immense  herds,  and  cowboys 
are  gradually  disappearing,  and  thousand  acre 
stock  farms  and  barbed-wire  fences  are  taking 
their  place. 

Even  Yellowstone  Park  was  overrun  by  swarms 
of  greedy  speculators.  An  editorial  in  the  Brook- 
lyn Eagle  in  1885,  discussing  this  matter,  said : 

"  KEEP  THEM  OUT  OF  YELLOWSTONE  PARK. 

An  effort  is  being  made  to  convert  the  national 
property  known  as  Yellowstone  Park  to  private 
uses.  Political  and  financial  pressure  can  readily 
be,  and  perhaps  have  been,  brought  to  bear  on 
Congress  to  further  the  schemes  of  land  grabbers, 


120  STOCK 

hotel  builders  and  railway  magnates,  who  fancy- 
that  in  this  region  are  opportunities  for  the  mak- 
ing of  big  -fortunes.  Yellowstone  Park  was  set 
apart  from  permanent  settlement  for  the  benefit 
of  the  American  people  and  of  all  other  people 
who  choose  to  explore  it.  No  spot  of  earth  con- 
tains so  many  scenic  beauties,  so  many  wondrous 
exhibitions  of  color,  so  many  phenomena  of  scien- 
tific interest  as  this  reservation.  There  are  snowy 
peaks  brooding  over  wide  expanses  of  forest ; 
canons  cleave  the  earth  to  a  fearful  depth  and  re- 
sound with  roar  of  cataracts  plunging  into  them  ; 
fantastic  rock  forms,  painted  in  colors  of  almost 
prismatic  liveliness,  dot  the  mountain  sides  ;  clear 
lakes,  with  flower  gemmed  banks,  gleam  in  the 
valleys ;  hills  of  sulphur,  dykes  of  crystallized 
basalt  and  domes  of  limestone  form  monuments  of 
volcanic  action,  as  do  the  cliffs  of  sparkling  black 
glass,  as  high  as  the  Hudson  River  Palisades ;  hot 
springs  pour  from  terraces  of  self-built  travertine, 
the  frets  and  water  growths  that  face  and  line 
pools  rivaling  frost  work  in  their  delicacy  ;  '  paint 
pots  '  blob  and  sputter,  boiling  red  .and  yellow 
slime  of  sulphurous  odor ;  fumarolesand  solfataras 
roar  and  whistle ;  boiling  pools  stripe  the  plains 
of  sinter  with  metallic  colors,  marking  their  lines 
of  outflow,  and  geysers  fling  their  columns  150 
feet  from  earth,  shaking  the  ground  with  the  fury 
of  their  eruptions,  charging  the  winds  with  clouds 
of  steam  and  scaring  the  elk  in  the  covert  with 


SPECULATION.  121 

Leir  hoarse  bellowing.  There  are  scenes  of  more 
tranquil  beauty,  also  ;  grassy  plains,  slopes  com- 
manding prospects  of  purple  mountains,  still 
rivers,  and  cascades  showering  in  silver  sheets  into 
shaded  pools.  It  is  a  region  of  wonder  and  de- 
light, and  should  inure  forever  to  the  people. 

To  apportion  the  park  among  railroad  com- 
panies that  would  strip  its  forests  from  the  hill- 
sides, and  to  land  speculators  who  would  fence  in 
the  springs,  the  geysers  and  the  canons,  peddling 
admissions  thereto,  as  used  to  be  done  at  Niagara, 
would  cast  disgrace  on  every  official  and  represen- 
tative engaged  in  such  an  act.  It  would  be  sim- 
ple robbery  of  the  public,  as  much  so  as  would  be 
the  gift  of  Prospect  Park  to  private  corporations, 
for  conversion  into  stock  and  lumber  yards. 
Thousands  of  tourists  visit  the  Yellowstone  every 
Summer  for  health,  pleasure  and  instruction,  and 

le  number  is  increasing  every  year. 

Speculators  and  monopolists  have  already  secur- 
ed possession  of  vast  territory  beyond  the  Missis- 
sippi, non-residents  owning  over  21,000,000  acres, 
and  the  farmer  and  ranchman  who  wishes  to  start 
for  himself  in  a  moderate  way  no  longer  finds  that 
as  easy  to  do  as  it  was  twenty  years  ago.  Should 
Yellowstone  Park  be  opened,  at  the  instigation  of 
lobbyists  who  are  trying  to  influence  Congress  to 
that  end,  intending  settlers  would  have  little  bene- 

it  of  it.     The  park  cannot  be  turned   into  farms, 


122  STOCK 

for  most  of  its  surface  is  mountainous,  and  lifted 
into  plateaus  from  3,000  to  8,000  feet  above  the 
sea.  The  climate  is  therefore  chilly,  frosts  are 
common  in  the  nights  of  Summer,  and  Winter 
comes  early  and  stays  late.  The  valleys  could  be 
used  as  cattle  ranges,  but  there  is  richer  grass  and 
more  abundance  along  the  Yellowstone  below  the 
park. 

It  has  been  asserted  that  there  is  need  of  a  rail- 
road through  this  region  to  establish  communica- 
tion between  the  Northern  and  Union  Pacific 
lines  ;  an  assertion  about  as  sensible  as  that  would 
be  which  should  claim  that  in  order  to  establish 
connection  between  Fulton  and  Court  Streets  it 
was  necessary  to  go  over  the  top  of  the  City  Hall. 
The  park  is  sixty  miles  broad  — narrower  than  the 
grant  that  the  railroad  projectors  probably  hope 
to  secure — so  that  is  no  great  hardship  on  the  rail- 
road companies  to  go  on  either  side  of  it  ;  and,  as 
a  matter  of  fact,  it  would  be  a  difficult  thing  to 
push  a  railroad  through  this  domain,  for  the  moun- 
tains form  an  almost  impenetrable  barrier.  One 
railroad  is  already  in  operation  between  Helena 
and  Ogden  to  westward  of  the  park,  and  that  more 
than  suffices  for  the  traffic  between  the  Union  and 
Northern  Pacific  lines.  If  it  is  desired  to  link  them 
together  at  another  point,  the  line  should  be 
drawn  at  least  200  miles  east  ward  from  the  Yel- 
lowstone, where  there  would  naturally  be  more 


SPECULA  TION. 


123 


ivel  and  more  freighting  than  among  the  wild 
id  uninhabited  mountains  and  alkali  deserts  of 
ryoming.  There  is  no  excuse  for  despoiling 
Yellowstone  Park.  Keep  the  vandals  and  specu- 
lators out  of  it." 


124  STOCK 


CHAPTER  XVI. 

RAILROAD   RIVALRY. 

THE  stock  of  many  of  the  old  railroads  was  so 
largely  watered  that  they  were  made  to  pay 
dividends  on  a  capital  of  double  or  treble  their 
actual  cost.  These  corrupt  methods  were  destruc- 
tive. When  they  had  the  whole  monopoly  of  the 
carrying  business,  with  no  competition,  they  got 
along  famously.  But  when  they  had  to  divide  up 
the  business  with  new  competing  roads,  costing 
but  a  fraction  of  the  enormously  watered  stock  of 
the  old  companies,  then  it  became  difficult  to  pay 
interest  on  bonds  and  fixed  charges  and  have  any- 
thing left  for  dividends. 

Thus  when  the  railway  lines  connecting  through 
from  New  York  to  the  West  were  increased  from 
three  to  seven,  it  gave  rise  to  cut-rate  wars  and 
crippled  the  earning  capacity  of  all  of  them. 

Then  pool  partnerships  were  formed  to  stop 
cutting  and  restore  freight  rates  to  a  profitable 
basis.  In  the  end  it  was  found  that  there  was  not 
business  enough  to  go  around. 

The  New  York  Central  &  Hudson  River  Railroad 
was,  in  its  best  days,  one  of  the  grandest  properties 
in  the  country.     It  had  double  tracks  from  New 


JD 

„ 


: 


SPECULATION.  125 

ork  to  Albany,  and  was  a  great  four  track  road 
hrough  the  heart  of  the  State  from  Albany  to 
Buffalo. 

It  had  the  monopoly  of  a  remunerative  traffic 
11  along  its  line.  Its  allies,  the  Lake  Shore  and 
Michigan  Southern,  were  its  feeders  in  passenger 
and  an  enormous  through  freighting  business  from 
Chicago. 

The  bulk  of  the  products  of  the  great  West 
entering  New  York  for  home  consumption  and 
export  passed  over  its  line.  It  had  no  competitor 
for  local  traffic  from  tide  water  to  Lake  Erie,  ex- 
cept the  Erie  Canal,  and  that  only  for  about  six 
months  in  the  year. 

It  was  a  solid  eight  per  cent,  dividend  payer, 
and  so  continued  even  after  other  lines  became 
sharers  in  the  carrying  trade  from  the  West  to  the 
seaboard. 

About  half  its  stock  was  held  by  the  greatest 
apitalist  in  America,  who  was  as  much  an  auto- 

at  in  speculative  finance  as  any  despot  in  the 
political  world,  so  much  so  that  public  opinion 
and  the  influence  of  the  press  was  brought  to 
bear,  pointing  out  the  dangers  of  the  concentra- 
tion of  such  an  enormous  monopoly  in  the  hands 
of  any  one  man. 

It  was  probably  the  fear  of  restrictive  legislation 
that  induced  this  capitalist  to  dispose  of  the  bulk 
of  his  holdings  of -Central  Hudson  stock  that  it 
might  become  widely  distributed.     At  all  events 


126  STOCK 

W.  H.  Vanderbilt  privately  sold  250,000  shares  to 
a  syndicate  in  November,  1879,  and  100,000  shares 
more  in  January  following,  all  of  it  at  about  $120 
per  share,  which  was  from  six  to  nineteen  per 
cent,  below  the  price  at  market. 

Had  it  been  known  that  such  a  large  amount  of 
stock  was  for  sale,  it  would  have  been  sold  down 
by  the  bears,  to  the  demoralization  of  the  whole 
market.  Hence  it  was  sold  to  a  syndicate.  They 
could  take  time  to  feed  it  out  at  a  good  profit  ac- 
cording to  the  strength  of  the  market.  In  the 
meantime  Vanderbilt  had  immediate  relief  from 
the  pressure  of  public  opinion,  while  still  virtually 
controlling  the  road. 

The  building  of  the  New  York,  West  Shore 
and  Buffalo  Railway,  paralleling  the  Central  Hud- 
son road  its  entire  length,  was  a  speculation  and  a 
menace.  It  gave  rise  to  cut  rates  and  a  ruinous 
competition  for  local  business  all  along  the  line. 

Anything  like  a  remunerative  business  was  out 
of  the  question,  until  the  New  York  Central  se- 
cured the  control  of  the  West  Shore  under  fore- 
closure proceedings  on  a  majority  of  the  bonds  it 
had  bought  up. 

Thus  the  new  road  became  saddled  on  the 
Central  under  a  lease  fpr  100  years,  and  it  now 
has  to  pay  four  per  cent,  interest  on  $50,000,000  of 
West  Shore  bonds,  and  must  pay  operating  ex- 
penses, taxes  and  fixed  charges  of  every  kind  on 


SPECULATION.  127 

both  its  own  and  the  West  Shore  before  it  can 
pay  any  dividends  on  its  own  stock. 

In  former  years  one  of  the  great  sources  of  N. 
Y.  Central's  revenue  was  found  in  the  transporta- 
tion charges  on  wheat  from  the  West  for  export 
to  Europe. 

Now  the  wheat  deficit  of  European  nations  is 
largely  supplied  with  the  cereal  from  Russia  and 
India,  especially  the  latter,  which  can  ship  its 
wheat  by  the  short  cut  through  the  Suez  Canal, 
and  lay  it  down  in  the  markets  of  Europe  much 
cheaper  than  America  can.         / 

When  there  is  no  export  demand  for  our  grain 
products,  all  that  is  not  required  for  home  con- 
sumption will  naturally  remain  in  the  granaries  of 
the  West,  and  to  that  extent  be  a  loss  in  the  freight 
earnings  of  the  carriers. 

Besides  this,  where  the  Central  Hudson  formerly 
divided  freight  transportation  only  with  the  Erie 
Canal,  it  now  has  to  divide  up  with  more  than  half 
a  dozen  different  railroads  and  the  water  way,  all 
having  entrance  into  the  port  of  New  York. 

The  immediate  outlook  for  anything  more  than 
four  per  cent,  dividends  on  N.  Y.  Central  is  not 
promising.  It  may  eventually  pay  six  per  cent, 
income  on  its  stock,  but  it  will  be  a  long  time,  if 
ever,  before  it  can  pay  eight  per  cent,  again. 

LAKE    SHORE. 
The  Lake  Shore  and  Michigan  Southern  was 


128  STOCK 

almost  as  valuable  as  the  New  York  Central  until 
it  became  paralleled  by  the  New  York,  Chicago  and 
St.  Louis.  It  was  a  Vanderbilt  road,  and  an  eight 
per  cent,  dividend  payer  until  December,  1884, 
when  the  dividends  were  passed  and  not  resumed 
again  until  the  last  quarter  of  1886.  The  highest 
price  of  Lake  Shore  in  1881  was  135J-,  and  the  low- 
est about  115.  Its  highest  price  in  1884  was  I04f, 
and  the  lowest  59^,  but  it  did  not  reach  the  bot- 
tom of  its  decline  until  the  Spring  or  Summer  of 
1885,  when  the  price  went  under  51. 

NICKEL  PLATE. 

The  building  of  the  New  York,  Chicago  and  St. 
Louis  (Nickel  Plate)  so  close  alongside  the  Lake 
Shore  was  a  fearful  blow  at  the  Vanderbilt  pride. 

The  Nickel  Plate  was  the  cheapest  specimen  of 
a  railroad  that  was  ever  projected  or  constructed. 
It  was  a  speculation  and  a  very  brassy  concern  from 
the  outset.  W.  H.  Vanderbilt  made  the  worst  bar- 
gain of  his  life  when  he  bought  it.  It  was  the  only 
road  called  a  Vanderbilt  property  that  he  ever  al- 
lowed to  go  into  the  hands  of  a  receiver.  He  could 
not  help  it.  He  was  forced  to  the  extremity  for 
his  own  protection.  The  cutting  out  of  other 
interests  caused  a  fearful  howl  to  be  set  up. 

The  only  advantage  he  derived  by  the  posses- 
sion of  it  was  to  keep  it  from  destroying  the  busi- 
ness of  the  Lake  Shore.  However,  as  it  was,  it 
destroyed  the  financial   state   of  the  latter  road. 


SPECULA  TION.  1 2 9 

compelling  it  to  stop  dividends  for  a  time.  When 
the  Nickel  Plate  is  fully  reorganized,  the  bonds 
issued  will  be  guaranteed  by  the  Lake  Shore  and 
be  valuable.  But  its  stock,  except  for  control, 
will  not  be  worth  much. 

EFFECT    OF    VANDERBILT'S    DEATH. 

W.  H.  Vanderbilt  was  a  mighty  moving  power 
in  the  stock  market.  The  first  effect  of  the  death 
of  such  a  man  naturally  excites  fear  and  appre- 
hension that  he  has  left  a  large  line  of  speculative 
stocks  which  may  be  thrown  on  the  market,  caus- 
ing a  severe  decline  in  prices. 

He  died  on  the  afternoon  of  December  8,  1885, 
too  late  for  the  news  to  reach  the  Stock  Exchange 
before  the  close  of  business. 

The  news  was  wired  all  over  the  country  and  to 
Europe.  It  was  expected  that  a  flood  of  long 
stock  would  be  thrown  on  the  market  by  fright- 
ened people,  with  disastrous  results  on  values. 
Also  that  the  bear  operations  would  add  to  the 
demoralization. 

At  the  opening  of  business  next  morning  the 
alleries  of  the  Exchange  were   packed  by  those 

ger  to  witness  the  first  mad  rush  of  the  bears  to 
reak  the  market.  This  had  been  foreseen  :  the 
big  bulls  had  united  to  sustain  prices  as  a  matter 
of  self-preservation. 

Somehow  not  a  single  private  wire  in  the  street 
was  working.     The  bulk  of  country  selling  orders 

10 


E 


130  STOCK 

expected  were  kept  out  of  the  market  and  the 
bears  were  handicapped  by  lack  of  these  reinforce- 
ments. 

The  battle  opened  at  10  o'clock  with  a  wild 
rush.  The  contending  factions  came  together 
like  two  thunder  clouds  followed  by  a  hoarse  roar. 
The  bears  closed  in  and  drove  the  bulls  back  from 
their  positions.  This,  however,  was  but  tempo- 
rary. The  bulls  rallied  and  bid  up  prices  as  fast 
as  the  bears  offered  them  down.  The  skirmish 
lasted  ten  minutes,  then  the  bears  retired  from  the 
contest. 

Prices  of  the  general  list  opened  one  and  two 
points  below  the  previous  day's  closing.  Lake 
Shore,  as  expected,  was  the  pivotal  stock,  and 
opened  off  three  per  cent,  at  85  from  88.  The 
bulls  put  it  up  to  86  and  kept  it  around  that 
figure.  The  chief  bull  in  Lackawanna  ran  his  pet 
stock  up  five  and  a  half  points  above  the  opening 
figure. 

Drexel,  Morgan  &  Co.  bought  25,000  shares  in 
the  first  flurry,  then  large  buying  orders  in  New 
York  Central  came  in  from  London,  engineered 
by  Mr.  D.  P.  Morgan,  who  had  just  arrived  from 
the  Continent. 

But  for  the  trick  in  stopping  telegraphic  orders 
to  sell,  from  all  over  the  country,  the  bulls  would 
have  been  compelled  to  buy  reams  upon  reams  of 
country  held  stock  in  order  to  sustain  the  market. 


SPECULATION.  131 


CHAPTER  XVII. 

MANIPULATION. 

WHEN  circumstances  are  not  favorable  for  a 
decided  advance  or  decline  in  prices,  the 
fluctuations  of  the  market  are  often  almost  wholly 
artificial.  At  such  times  the  "  big  men "  keep 
prices  steady  by  washes,  without  accumulating 
stock,  or  leave  the  market  to  the  room  traders  to 
operate  for  scalping  profits. 

The  room  traders  are  their  own  brokers,  and 
pay  no  commission,  unless  on  orders  executed  for 
them.  Each  fraction  their  way  on  100  shares 
shows  them  a  profit  in  sight  of  $12.50,  and  each 
point  $100. 

As  speculation  turns  so  largely  on  trickery  and 
artifice,  what  is  to  hinder  some  ten  or  twenty 
room  traders,  more  or.less,  forming  a  secret  "  com- 
bine "  to  put  the  prices  of  certain  stocks  up  and 
down  within  a  range  of  one  or  two  per  cent.,  and 
repeat  two  or  three  times  a  day?     Two,  three,  or 

I  four  different  stocks  are  enough  for  their  purpose. 
To  take  the  whole  list  in  hand  would  be  too  big  a 
job. 

They  could  begin  by  buying  500  or  1,000  shares 
each  of  Union   Pacific  at,  say,  50,  Jersey  Central 


132  STOCK 

at  55,  Lackawanna  at  130  and  St.  Paul  at  90.  All 
these  they  might  pick  up  without  raising  the  price, 
by  washing  prices  back  every  time  the  price  ad- 
vanced a  fraction  or  two.  Having  secured  the 
stock  they  want,  say  2,000  or  4,000  shares,  what  is 
to  hinder  their  washing  prices  up,  say,  2  per  cent, 
by  1 1  o'clock  ? 

Then  to  sell  out  and  take  profits  around  the  top, 
prices  could  be  kept  up  on  washes  until  they  had 
sold  out  and  got  on  the  short  side  2,000  or  4,000 
shares.  Then  the  washing  down  process  could  be 
brought  into  play,  and  by  1  o'clock  they  could 
cover  their  shorts  and  get  around  on  the  long  side 
again,  2,000  or  4,000  shares.  Then  by  washing 
prices  up  they  might  sell  out  and  get  short  again 
and  close  out  their  deals  by  3  o'clock,  leaving 
prices  to  close  just  about  where  they  opened  in 
the  morning.  Here  would  be  two  deals  on  the 
bull  side  and  two  on  the  bear  side.  With  profits 
of  2  per  cent,  on  each  deal,  the  gain  on  2,000 
shares  would  be  $4,000  each  time — total  4  times, 
$16,000.  If  it  was  4,000  shares  at  2  per  cent,  on 
each  of  the  four  deals  the  profits  would  be  $32,- 
000  to  divide  up  among  the  pool. 

But  who  would  be  buying  all  this  stock  of,  or 
selling  it  to  them  ?  Why,  those  fellows,  the  tape 
speculators,  scattered  around  in  a  hundred  stock 
houses.  Some  of  them  would  get  out  with  a  little 
profit,  the  rest  would  get  left. 

Such   practices  are  not  given  in  this  work  as 


SPECULA  TION.  1 3 3 

actual  facts.  Outsiders,  and  even  many  brokers, 
are  not  let  into  the  inner  secrets  of  the  board 
room.  But  if  some  of  those  inside  fellows,  who 
operate  for  their  private  account,  were  brought  to 
the  confessional  they  could  make  surprising  reve- 
lations. 

Certain  it  is,  the  market  is  often  made  to  fluctu- 
ate up  and  down  within  certain  limits,  and  a  class 
of  room  traders  are  known  to  buy  and  sell,  indi- 
vidually, many  hundred  shares  a  day  for  their 
private  account. 

In  this  connection,  a  little  story  may  not  be  out 
of  place  to  illustrate  : 

Michael,  on  his  way  to  church,  meets  Pat,  an 
unconverted  Irishman,  who  had  never  been  in  a 
church  in  his  life,  and  persuades  Pat  to  go  with 
him.  In  the  church  Pat  looks  around  in  open- 
eyed  wonder  while  Michael  proceeds  with  his 
devotions.  Presently  Pat  flops  down  on  his  knees 
alongside  of  Michael  and  whispers  :  "  This  bates 
the  devil."  "  That  is  the  intintion  Pat,"  says 
Michael,  in  the  middle  of  a  pater  noster. 

The  point  is  that  the  tricks  of  the  stock  market 
"  bates  the  devil,"  and  that  seems  to  be  the  inten- 
tion, too,  so  far  as  the  speculative  public  who 
come  into  it  are  concerned. 

SPECULATIVE   CLERKS. 

Clerks  in  brokerage  offices  are  in  a  very  hotbed 
f   temptation.     Next    to    the  brokers,  executing 


134  STOCK 

orders  in  the  board  room,  they  are  the  class  who 
have  the  earliest  information  as  to  which  way  the 
tide  is  running  among  the  speculators  in  their  own 
office.  For  orders  executed  by  the  broker  are 
usually  sent  in  immediately,  by  messenger,  to  be 
entered  on  the  books. 

All  the  business  is  confidential.  The  clerks 
must  keep  the  secrets  of  the  office  and  not  reveal 
the  operations  of  one  customer  to  any  of  the 
others. 

Some  speculators  maintain  great  secrecy  as  to 
the  side  they  are  operating  on  and  of  the  stocks 
they  are  dealing  in.  Their  deals  can  only  be 
guessed  at.  Others  are  free  to  let  everybody 
know  what  they  are  doing. 

In  some  offices  there  are  large  traders,  who 
operate  for  big  stakes.  And  if  most  of  the  other 
customers  are  making  ventures  in  the  same  direc- 
tion, the  cupidity  of  the  clerks  is  aroused  to  get  in 
the  swim,  if  they  have  a  little  money  to  put  up  as 
margin.  $25,  $50  or  $100  will  do  for  from  20  to 
50  shares. 

Yet,  with  all  the  chances  and  the  insight  of 
what  is  going  on,  they  are  just  as  unlucky  as  any 
other  class  on  the  Street.  They  may  hit  right  for 
several  times  in  succession.  In  the  end  they  risk 
all  once  too  often  and  are  left  as  bad,  or  worse  off 
than  before. 

One  young  man  inherited  $20,000.  He  came 
in  the  Street  with  the  idea  of  making  it  $100,000. 


SPECULATION.  135 

The  usual  result  followed  ;  he  soon  lost  it  all.  He 
became  a  clerk  and  is  an  impecunious  clerk  still, 
living  from  hand  to  mouth,  always  trying  his  luck 
when  he  can  raise  a  1  per  cent,  margin  on  ten  or 
twenty  shares,  which  is  often  swallowed  up  within 
an  hour  of  the  venture. 

The  parents  of  a  clerk  in  a  stock  office,  on  leav- 
ing home  for  a  vacation,  left  $200  with  him  to  pay 
rent  and  household  expenses  during  their  absence. 
He  got  a  sure  point  that  a  certain  stock  would 
have  a  good  rise  and  bought  100  shares  on  a  two 
per  cent,  margin.  The  "  sure  point  "  proved  a 
crooked  steer,  and  his  deal  was  closed  out  within 
two  hours,  with  the  $200  all  "  gone  where  the 
woodbine  twineth." 

Another  clerk,  with  a  very  small  margin  as  a 
basis,  had  a  great  run  of  luck.  Profits  accumu- 
lated until  he  had  $20,000.  Had  he  been  wise  and 
run  away,  all  would  have  been  well.  But  excited 
by  cupidity  to  make  a  great  strike,  he  bought  stocks 
to  the  full  strength  of  his  $20,000  as  margin.  It 
happened  he  bought  too  high  up,  for  the  bears 
got  control  of  the  market  and  raided  values  down 
15  per  cent,  in  two  or  three  days.  The  $20,000 
vanished  like  a  dream,  leaving  him  to  chew  the 
cud  of  sweet  and  bitter  fancies.  He  is  still  trying 
his  luck  in  a  small  way  and  "  waiting  like  Micaw- 
ber  for  something  to  turn  up." 

As  a  class  the  clerks  in  Wall  Street  offices  are 
better  paid  than  those  in  almost  any  other  business. 


136  STOCK 

They  are  in  a  dangerous  atmosphere  of  tempta- 
tion, and  few  can  resist  the  seductive  influences  of 
their  surroundings.  They  are  thoroughly  imbued 
with  the  instinct  of  the  gambler.  The  one  who 
would  scruple  to  match  silver  dollars,  halves  or 
quarters  on  the  contigency  of  a  certain  stock  go- 
ing up  or  down,  would  almost  be  a  rara  avis  among 
his  fellows. 

WOMEN   SPECULATORS. 

People  having  no  actual  experience  of  Wall 
Street  can  have  but  a  faint  idea  of  the  extent  of 
the  hallucination  which  continually  draws  fresh 
grist  to  the  speculative  mill.  In  effect  it  is  a  spe- 
cies of  insanity  which  allures  young  and  old  of 
both  sexes  into  the  maelstrom.  Some  come  for 
excitement,  to  relieve  their  minds  of  other  troubles. 
All  come  to  try  their  luck  in  the  race  for  wealth. 

Often  fathers  and  sons,  or  mothers  with  a  son 
or  daughter,  just  taking  an  eye-opener  in  the  great 
world  of  business,  stand  side  by  side  at  the  tickers. 
If  fortune  favors  for  the  moment,  they  laugh  and 
cackle  and  build  castles  in  the  air.  More  often 
they  are  depressed  with  gloom,  or,  if  women, 
wring  their  hands  in  terror  as  they  see  their  money 
disappear.  What  a  school  to  initiate  the  young 
into  the  mysteries  of  gambling  ! 

A  great  many  offices  have  a  clientele  of  women 
speculators  who  commence  by  dealing  in  100  share 


SPE  C  ULA  TION.  1 3  7 

ts  and  upwards.  Some  of  the  best  customers 
are  found  in  the  ranks  of  the  fair  sex. 

A  correspondent  of  the  Brooklyn  Eagle  got  the 
following  description  from  a  broker  friend : 

About  ten  minutes  before  the  ticker  announces 
the  opening  of  the  Exchange  her  loveliness  pops 
into  the  private  office  and  reads  all  the  gossip  hung 
upon  the  hooks.  She  then  seats  herself  to  await 
the  first  quotation.  In  the  meantime  her  vocabu- 
lary organs  are  exercised  in  discussing  the  latest 
move  of  Jay  Gould  or  the  last  fluctuation  in  the 
coal  stocks  or  the  Chicago  syndicate.  Tick,  tick. 
"  My  gracious  !"  she  exclaims, "  St.  Paul.  90J.  Close 
out  my  short  stuff  at  the  market.  Telegraph  47J. 
Buy  me  100  at  an  eighth.  Oh,  no,  don't.  It's  an 
eighth  now.  Make  it  at  four.  Have  you  got  my 
St.  Paul  yet  ?  "  She  gets  it  at  90!,  and  it  imme- 
diately declines  to  90.  Then  she  becomes  angry, 
and  flounces  out  of  the  office,  only  to  return  inside 
of  half  an  hour,  when  she  wants  to  know  if  that 
Telegraph  was  bought  at  74.  No,  it  was  not,  as 
eighth  was  the  lowest  price  touched,  and  the 
uotation  at  the  time  of  her  query  was  75^.  It  is 
not  always  thus,  however,  as  sometimes  they  make 
"big  winners;"  but  on  the  average  they  become 
hardened  to  the  "  call  for  margins,"  and  resign 
themselves  to  almost  perpetual  losses. 

Sooner  or  later  many  of  them  become  so  reduced 
by  ill-luck  that  they  can  no  longer  swing  stocks  in 
100  share  lots.     Then  they  drift  over  to  the  offices 


1 1 

; 


138  STOCK 

of  the  Consolidated  Exchange,  where  they  will 
continue  to  speculate  in  ten  share  lots  until 
"  busted." 

Some  of  the  small  offices  are  infested  by  women. 
A  few  try  their  luck  in  oil,  others  confine  them- 
selves to  stocks. 

They  are  women  of  good  character,  aside  from 
the  propensity  to  risk  their  present  and  future 
support  on  the  game  of  chance. 

Not  all  of  them  belong  in  New  York  and  adja- 
cent cities.  Many  come  from  the  South,  the  West 
and  California. 

The  Southern  ladies  are  a  kind,  good-hearted, 
lively  and  vivacious  race.  Some  of  the  older  ones 
were  brought  up  on  plantations  with  numerous 
slaves  to  execute  their  slightest  wish.  When 
their  personal  chattels  were  confiscated,  and  they 
became  impoverished  by  the  results  of  the  war,  they 
roamed  off  into  new  fields  in  search  of  fortune  or 
adventures.  Some  of  them  are  traveled  ladies  of 
the  highest  intelligence  and  far-reaching  informa- 
tion, who  have  been  nearly  all  over  the  world. 

In  speculation,  as  a  rule,  they  are  too  impulsive 
and  quick  to  jump  at  wrong  conclusions.  If  they 
see  prices  go  up  a  point  or  two  they  buy,  thinking 
a  big  rise  is  coming  sure.  But  four  times  out  or 
six  they  find  they  have  bought  at  the  top  and  got 
left.  Hence,  they  seem  to  suffer  worse  than  the 
men  who  are  more  calculating,  cautious  and  wary. 

They  are  just  as  rip-roaring  bulls,  or  as  rampant 


SPECULA  TION.  1 39 

bears  as  the  men.  If  prices  are  on  the  decline 
they  go  short  on  general  principles,  too  often  to 
find  they  have  sold  near  the  bottom  and  got  left 
again.  But  no  matter,  like  all  votaries  of  fortune 
they  seldom  give  up  the  game  as  long  as  they  can 
raise  a  margin. 

One  lady  was  asked  if  she  expected  to  get  rich. 
She  answered,  "  No  !  I  only  want  to  get  even." 
The  cat  was  out.  She  had  once  had  money 
enough  to  swing  stocks  by  the  hundreds  of  shares. 
Here  she  was  dealing  in  ten  share  lots  in  hopes  of 
getting  back  the  money  she  had  lost.  Fallacious 
hope  ! 

Another  lady  who  was  very  unlucky  was  asked, 
"  Why  don't  you  quit?"  She  said,  "She  must 
get  away  from  family  troubles  and  have  some 
divertisement."       # 

All  hands  in  the  market  are  keen  after  points. 
None  are  more  so  than  the  women.  "  Big  men," 
whom  rumor  says  are  operating  in  this  or  that 
stock,  are  besieged  for  pointers. 

A  good  story  is  told  at  the  expense  of  the  late 
Mr.  WoerishofTer.  A  certain  lady  was  in  the  habit 
of  looking  to  him  for  straight  points.  One  day 
he  spied  the  lady  coming  in  his  orifice,  and  not 
wishing  to  deceive  her,  or  give  his  movements 
away,  he  hid  behind  a  door.  The  lady  not  find- 
ing him  in  took  a  seat  and  kept  it  so  long,  that 
Woerishoffer  was  almost  petered  out  with  ennui 
before  she  got  up  and  left. 


140  STOCK 

Some  ladies  come  in  the  street  in  silks,  satins, 
gold  jewelry  and  diamonds.  Others  show  very 
plain  how  the  fickle  jade  has  treated  them,  by 
their  well-worn  semi-genteel  costumes. 

A  young  broker,  whose  customers  were  mostly 
ladies,  was  asked  why  they  were  more  unfortunate 
than  the  men.     Said  he  : 

"  Why,  blank  'em  !  The  blank-blanked  fools 
always  buy  at  the  top,  as  if  prices  would  never 
stop  going  up.  They  get  left  and  hold  on  until 
prices  are  near  the  bottom,  then  they  get  fright- 
ened, sell  out  and  go  short  as  if  prices  would  never 
stop  going  down.  That's  the  way  they  are 
cleaned  out." 


SPECULA  TION.  I4] 


CHAPTER  XVIII. 

THE   PETROLEUM   EXCHANGE. 

THE  Consolidated  Stock,  Mining  and  Petro- 
leum Exchange  is  on  Broadway,  just  north 
of  Exchange  Place.  It  extends  through  to  New- 
Street,  with  the  New  York  Stock  Exchange  only 
a  few  doors  above  on  the  opposite  side. 

This  institution  is  the  New  York  market  of  the 
Standard  Oil  Company's  products,  and  is  con- 
nected by  wire  with  the  Exchange  at  Oil  City. 

As  long  as  the  concern  confined  its  business 
to  oil  and  mining  stocks  ''everything  was  lovely 
and  the  goose  hung  high  "  between  it  and  the 
Stock  Exchange.  Many  of  the  stock  brokers 
became  members  of  the  Oil  Exchange  to  carry  on 
deals  in  that  article  for  their  customers. 

But  when  the  Consolidated  institution  began  to 
usurp  the  functions  of  the  other  in  dealing  in  rail- 
way stocks  and  bonds,  it  gave  rise  to  jealousy  and 
a  bitter  feeling  towards  it  on  the  part  of  the 
brokers  in  the  old  establishment. 

So  intense  did  this  feeling  become,  that  by  order 
of  the  Governing  Committee  of  the  Stock  Ex- 
change, all  brokers  who  had  memberships  in  the 
Consolidated  were  compelled  to  withdraw  under 


142  STOCK 

penalty  of  losing  their  seats  in  the  Stock  Exchange, 
which  were  worth  about  $25,000  each. 

The  Consolidated  was  dependent  on  the  other 
Exchange  for  its  quotations  of  stocks  and  bonds. 
Could  the  brokers  of  the  latter  have  had  their  way, 
it  would  have  been  deprived  of  a  connecting  ticker 
service.  But  it  had  a  contract  with  the  Gold  and 
Stock  Telegraph  Co.,  which  did  not  expire  until 
the  Spring  of  1886. 

The  Oil  Exchange  first  began  dealing  in  railway 
stocks  and  bonds  in  1884.  Speculators  can  buy 
or  sell  there  by  the  hundred  shares,  or  in  fractional 
lots  of  ten  shares  upwards.  Stocks  could  and  can 
be  bought  in  less  amounts  than  100  shares  at  the 
old  Exchange,  but  stock  is  not  easily  borrowed  to 
make  deliveries  on  fractional  short  sales  of  less 
than  100  shares.  This  difficulty  is  obviated  at  the 
Oil  Exchange,  and  small  lots  can  be  bought,  sold 
or  borrowed  freely. 

A  new  ticker  service,  invented  especially  for 
it,  came  into  use  in  1886.  Now,  while  the  Con- 
solidated Exchange  claims  to  be  independent  and 
to  make  its  own  quotations,  it  continues  to  follow 
closely  the  prices  made  at  the  Stock  Exchange, 
which  latter  used  to  stigmatize  its  rival,  in  de- 
rision, as  nothing  but  a  huge  bucket  shop. 

A  large  part  of  the  members  are  young  men, 
many  of  them  "  cheap  Johns,"  ravenous  for  cus- 
tomers and  commissions  ;  who  will  buy  or  sell  ten 
share  lots  for  their  clients  on  the  smallest  margins 


SPECULATION.  143 

3,  2  and  even  1  per  cent.    They  will  do  the  best 

tey  can  for  their  customers.  But  as  self-preser- 
vation is  nature's  first  law,  they  will  look  out  for 
their  own  safety,  first,  last,  and  all  the  time. 

Most  all  the  business  is  on  margins,  and  a  small 
capital  goes  a  good  ways,  when  they  can  get  the 
stocks  bought  for  customers,  carried  on  interest 
by  a  trust  company,  which  holds  the  stock  bought 
as  collateral. 

A  young  man  who  can  buy  a  seat  costing  a  few 
hundred  dollars  becomes  a  broker.  He  then  wants 
a  partner  who  can  put  up  some  capital.  A  cheap 
office  is  hired,  perhaps,  up  on  a  fourth  or  fifth 
floor.  The  partner's  business  is  to  attend  to  cus- 
tomers, and  look  after  the  book-keeping,  while 
the  broker  is  in  the  Board  to  execute  orders. 

As  a  firm  they  may  agree,  for  mutual  safety, 

)t  to  speculate  themselves.  The  great  thing  is 
to  get  straight  points.  The  office  man  is  always 
on  the  alert  for  points  to  steer  customers  in  and 
out.  He  runs  down  to  the  offices  of  the  big 
brokers,  has  an  ear  open  to  curbstone  brokers  and 
everybody  for  hints  as  to  ups  or  downs.  Then 
back  to  the  office  he  is  very  free  with  his  opinions 
to  influence  or  lead  his  clients  in  long  or  short. 

Notwithstanding  the  agreement  for  mutual 
safety,  if  the  office  man  thinks  he  has  a  straight 
pointer  for  a  movement  of  several  per  cent,  up  or 
down,  he  will,  not  unfrequently,  run  down  to  the 
bucket  shops  and  buy  or  sell  100  or  200  shares  on 


144  STOCK 

a  one  per  cent,  margin  unknown  to  his  partner, 
the  broker.  He  may  win  at  one  time  and  lose  at 
another.  The  infatuation  of  gambling  is  on  him ; 
the  stability  of  the  firm  rests  on  a  volcano,  which 
when  it  bursts  will  land  both  of  them  among  the 
shorn  lambs. 

A   GIANT   MONOPOLY. 

The  Standard  Oil  Company  is  the  manipulating 
power  behind  the  curtain  in  all  the  great  move- 
ments in  petroleum  in  this  country.  The  time 
was  when  it  had  practically  the  entire  monopoly 
of  supplying  the  markets  of  the  world  with  this 
product.  But  later,  the  discovery  of  immense  oil 
fields  in  Russia  developed  a  powerful  rival  and 
brought  it  into  competition  with  another  mon- 
opoly in  supplying  the  wants  of  other  nations. 

The  Nobel  Brothers  have  immense  oil  works  at 
Baku,  and,  it  is  said,  now  control  more  petroleum 
than  any  other  concern  in  the  world.  Their 
wealth  is  moderately  estimated  at  ^"80,000,000 
sterling. 

The  uses  to  which  the  oil  may  be  adapted  are 
various,  and  constantly  being  increased  by  new 
discoveries.  "The  value  of  the  residual  product  of 
petroleum  distillation  as  an  efficient  and  economi- 
cal source  of  steam  power  is  claimed  to  have  been 
conclusively  established  in  connection  with  the 
marvelous  development  by  the  Brothers  Nobel,  of 
the  petroleum  industry  at   the  Baku  Works,  Rus- 


•       SPECULA  TION.  145 

,  which  are  fed  through  pipe  lines  of  an  aggre- 
gate length  of  more  than  sixty  miles,  by  the 
apparently  inexhaustible  supplies  of  the  Aspheron 
Peninsula. 

The  residual  or  heavy  oil  which  remains  after 
extracting  the  illuminating  and  lubricating  oils 
from  the  petroleum,  and  of  which  the  Messrs. 
Nobel  alone  now  produce  450,000  tons  annually, 
is  already  used  as  fuel  on  upwards  of  three  hun- 
dred steamers  upon  the  Caspian  Sea  and  the 
Volga,  and  by  the  locomotives  on  the  Trans-Cau- 
casian and  Trans-Caspian  railways. 

In  regard  to  the  employment  of  refuse  petro- 
leum as  fuel  in  locomotive  engines,  it  is  claimed 
that,  weight  for  weight,  it  has  33  per  cent,  higher 
evaporative  value  than  anthracite,  and  that  while 
60  per  cent,  of  efficiency  is  realized  with  the  lat- 
ter, 75  per  cent,  is  obtained  with  petroleum 
refuse." 

A  clerk's  bonanza. 

The  "  pipe  line "  system,  of  conveying  the 
oleaginous  fluid  from  the  oil  regions  to  the  sea- 
board through  conduits,  originated  with  a  poor 
clerk  in  a  New  York  office.  He  was  in  bad  health, 
and  his  employers  sent  him  to  Oil  City  to  fix 
some  business  for  them,  as  well  as  to  give  him  a 
chance  to  recuperate. 

The  shipment  of  the  crude  product  from  the 
interior  to  the  refineries  near  tide  water  in  barrels 

Kd  oil  cars  was  expensive  and  troublesome. 
11 


146  STOCK 

The  clerk  fixed  his  business,  then  looking  around 
at  his  leisure,  took  in  the  situation,  and  at  last 
'*  caught  on  "  to  an  idea  of  a  series  of  tanks  at  dis- 
tant points  with  pipes  through  which  the  oil  could 
be  forced  by  pumps  from  one  station  to  another. 
He  kept  his  own  counsel,  developed  his  idea  and 
took  out  letters  patent.  There  was  "  millions  in 
it,"  but  he  did  not  know  it. 

Oil  capitalists  soon  saw  the  immense  value  of 
the  invention  and  offered  him  $500,000  cash  for 
all  his  right,  title  and  interest  in  it. 

He  was  only  a  poor  clerk,  on  a  salary.  The 
sum  seemed  so  enormous  he  grabbed  for  it,  with- 
out a  second  thought,  and  sold  out.  It  is  said  had 
he  retained  the  whole  monopoly  of  the  fruit  of 
his  brain,  it  would  have  been  worth  to  him 
$500,000,000. 

The  manner  in  which  these  pipe  lines  are  cleaned, 
from  time  to  time,  is  thus  described  by  the  New 
York  Sun  ; 

The  pipes  by  which  petroleum  is  transported 
from  the  oil  regions  to  the  seaboard  are  cleaned  by 
means  of  a  stem  2$  feet  long,  having  at  its  front 
end  a  diaphragm  made  of  wings  which  can  fold  on 
each  other,  and  thus  enable  it  to  pass  an  obstruc- 
tion it  cannot  remove.  This  machine  carries  a  set 
of  steel  scrapers  somewhat  like  those  used  in  clean- 
ing boilers.  It  is  put  into  the  pipes  and  propelled 
by  the  pressure  transmitted  from  the  pumps  from 
one  station  to  another.     Relays  of  men  follow  the 


SPECULA  TION. 


147 


scraper  by  the  noise  it  makes  in  its  progress,  one 
party  taking  up  the  pursuit  as  the  other  is  ex- 
hausted. They  must  not  let  it  out  of  their  hear, 
ing,  for  if  it  stops  unnoticed  its  location  can  only 
be  established  by  cutting  the  pipe. 

On  10  per  cent,  margin  $1,000  will  buy  or  sell 
,000  barrels  of  oil,  which  is  equal  to  100  shares 
of  stock,  and  the  commissions  are  the  same,  \ 
each  way.  The  oil  is  supposed  to  be  on  storage, 
and  those  who  go  long  of  it  have  to  pay  an 
average  of  about  70  cents  a  day  storage  charges 
on  each  10,000  barrels.  If  oil  is  cornered,  those 
short  of  it  have  to  pay  loaning  rates  for  borrowed 
oil  to  make  their  deliveries.  Oil  in  tanks  is  dealt 
by  pipe  line  certificates. 


148  STOCK 


CHAPTER  XIX. 

THE   PRODUCE    EXCHANGE. 

ABOUT  forty  years  ago  a  few  old-time  merchants 
used  to  meet  under  an  awning  on  the  side- 
walk at  Broad  and  South  Streets,  where  they  made 
purchases  and  sales  of  grain  and  produce  for  home 
consumption  and  export  from  canal  boats  and 
coasting  vessels,  bringing  wheat  and  other  truck 
to  New  York  for  a  market. 

As  the  business  grew  and  the  membership  in- 
creased, a  building  was  hired,  which  became  known 
as  the  Corn  Exchange.  Here  business  was  done 
in  the  actual  purchase,  sale  and  delivery  of  pro- 
ducts, free  from  much  of  the  purely  margin-gam- 
bling deals  with  which  the  bona  fide  transactions 
of  the  present  day  are  mixed. 

In  i860  the  members  had  increased  to  about 
700,  and  increased  accommodations  were  wanted. 
They  raised  a  fund  by  subscription  among  them- 
selves, and  purchased  the  block  of  ground  at 
Whitehall,  Water  and  Pearl  Streets.  Here  they 
erected  the  first  Produce  Exchange  building,  which 
was  completed  in  1861. 

In  1879  tne  membership  had  increased  to  over 
•  2,500,  and  again  more  room  was  wanted. 


SPE C ULA  TION.  1 49 

At  first,  when  the  Association  did  business  at 
Broad  and  South  Streets,  the  initiation  fee  was 
$10,  which  in  time  was  increased  to  $500,  and  then 
to  $1,000. 

When  the  scheme  of  a  new  and  enlarged  Ex- 
change was  brought  up  in  1879  the  Association 
had  a  surplus  fund  of  about  $350,000.  It  was 
decided  to  use  this  money  towards  the  purchase 
of  a  new  site.  Accordingly  all  that  part  of  the 
block  at  the  foot  of  Broadway  and  along  White- 
hall Street,  extending  307J  feet  from  Beaver  to 
Stone  Street,  and  running  back  150  feet  on 
Beaver  and  149  feet  on  Stone  Street,  was  pur- 
chased for  $670,000. 

In  1882  the  corner-stone  of  the  New  Produce 
Exchange  was  laid,  and  the  structure  was  com- 
pleted in  1884.  To  sustain  the  enormous  weight 
of  the  building,  about  16,000  piles  were  used  under 
the  foundation,  driven  down  by  pile-drivers  from 
fifteen  to  twenty  feet  below  the  cellar. 

The  New  Produce  Exchange  is  one  of  the  lar- 
gest and  most  solidly  constructed  buildings  in  the 
city.  It  is  of  the  Italian  renaissance  style,  modi- 
fied. The  material  is  of  granite  to  the  top  of  the 
basement,  thence  the  wall  rises  in  red  Philadephia 
brick  and  terra  cotta  to  a  height  of  125  feet  above 
the  street. 

The  portals  of  the  three  fronts  on    Broadway, 


150  STOCK 

with  engaged  columns  on  the  sides  of  the  en- 
trances. The  cornices  and  copings  are  simple  but 
prominently  developed. 

On  the  east  end  of  the  building  on  Stone  Street, 
covering  an  additional  space  40  by  70  feet,  is  a 
clock  tower  in  the  form  of  an  Italian  Campanile, 
200  feet  high.  North  of  this  is  a  terrace  from 
which  is  a  fourth  entrance  to  the  east  side  of  the 
building. 

In  the  interior,  on  the  first  floor,  is  a  magnifi- 
cent hall  about  15  feet  wide  running  through  the 
centre  from  Stone  to  Beaver  Street,  with  a  trans- 
verse hall  opening  on  Broadway,  and  another 
hall  on  the  south  side  opening  out  on  the  terrace 
and  clock  tower.  These  halls  are  tiled  with  va- 
riegated stone  in  blocks  and  figures  like  oil  cloth. 

The  Exchange  board  room  occupies  about  two- 
thirds  of  the  upper  floors.  It  is  215  feet  long,  134 
wide  and  60  feet  high,  lighted  by  both  windows 
and  skylights.  On  the  north  end  it  has  a  visitors' 
gallery  running  the  whole  width  of  the  room. 

On  the  several  floors  in  the  other  part  of  the 
building  are  about  300  offices,  executive  offices, 
library  and  coat  rooms.  All  these  floors  were  so 
designed  that  the  partitions  can  be  taken  down 
and  the  entire  space  added  to  the  present  arena 
of  the  bulls  and  bears,  making  one  grand  room 
extending  the  entire  length  and  width  of  the 
building. 

There  are  five  elevators  on  the  north  end  and 


SPECULATION.  151 

>ur  on  the  south  end,  one  of  which  runs  to  the 
roof  of  the  clock  tower. 

The  basement  under  the  south  half  of  the  build- 
ing is  used  for  the  vaults  of  the  Produce  Exchange 
Safe  Deposit  and  Storage  Company.  These 
vaults  occupy  a  space  125  feet  square  and  contain 
hundreds  of  safes  for  the  use  of  the  public,  be- 
sides plenty  of  room  for  the  storage  of  all  kinds 
of  valuables.  The  whole  building  is  fire-proof, 
and  the  vaults  are  claimed  to  be  the  strongest 
burglar  proofs  in  the  world. 

That  the  Produce  Exchange  is  a  source  of  great 
public  benefit,  in  moving  the  crops  and  finding  a 
market  for  our  products  at  home  and  abroad,  can- 
not be  denied.  It  is  equally  true  that  it  long 
since  became  the  scene  of  immense  gambling  opera- 
tions on  margins  for  catchpenny  profits  in  grain 
and  provisions.  The  same  kind  of  trickery,  mani- 
pulation, squeezes  and  corners  to  put  up  the  price 
of  wheat,  corn,  pork  and  lard  are  resorted  to  here, 
and  in  Chicago,  as  at  the  Stock  Exchange  to  put 
up  the  price  of  stocks  for  a  gambling  profit.  Prices 
are  raided  down  and  remunerative  values  destroyed 
for  another  gambling  profit,  by  many  who  never 
become  the  bona  fide  owners  of  the  stuff,  except 
as  it  is  bought,  sold,  delivered  and  really  owned  by 
the  brokers  who  carry  it  for  customers  on  margins. 
In  effect,  a  large  class  of  customers  operate  on  mere 
bets,  on  which  profits  or  losses  accrue  the  same  as 
in  any  other  species  of  gambling.     Certainly  the 


152  STOCK 

prosperity  of  the  country  is  not  promoted  by  the 
operations  of  the  bears  to  enrich  themselves  at 
the  expense  of  the  destruction  of  the  values  of 
other  people's  property. 

Aside  from  these  gambling  operations,  the  true 
legitimate  business  of  the  Exchange  is  of  immense 
benefit  to  agriculture  and  commerce. 

We  have  a  magnificent  country,  with  agricultu- 
ral resources  scarcely  more  than  half  developed. 
In  times  past  we  practically  had  the  monopoly  of 
supplying  Europe  with  grain  and  many  other  arti- 
cles of  commerce.  We  could  continue  to  feed 
our  own  fast  increasing  population  and  have  sur- 
plus enough  to  supply  the  demands  of  Europe  for 
generations  to  come. 

The  Produce  Exchange  Weekly  says  : 

The  acreage  of  land  adapted  to  wheat  culture 
in  the  States  and  Territories  of  the  Pacific 
coast  is  estimated  at  100,000,000  acres,  of  which 
25,000,000  lie  within  California,  18,000,000  in 
Oregon,  10,000,000  in  Colorado,  10,000,000  in 
Idaho,  while  the  area  allotted  to  Montana,  Utah 
and  Wyoming  is  placed  at  7,000,000  acres  each. 
The  bulk  of  all  this  wheat  land  yet  lies  untouched, 
the  area  of  wheat  harvested  in  these  States  and 
Territories  in  1885  being  as  follows:  California, 
2,822,400  acres;  Oregon,  876,102  acres  ;  Colorado, 
120,943  acres;  Idaho,  62,370  acres;  Montana, 
83,864  acres  ;  Utah,  96,861  acres,  and  Wyoming, 
3,180  acres. 


SPECULATION.  153 

nd  yet,  notwithstanding  our  almost  unlimited 
capacity  to  supply  the  shortage  of  European  crops, 
we  are  fast  losing  ground  in  our  exports  of  bread- 
stuffs. 

In  the  crop  year  1 880-1  there  were  7,945,786 
barrels  of  flour  exported;  the  year  1883-4  shows 
9,152,260  barrels  sent  abroad,  an  increase  of  the 
value  of  flour  exported  for  these  years  of 
$6,092,439.  To  make  comparisons  :  for  the  same 
years  there  was  a  decrease  of  80,216,465  bushels 
of  wheat  exported,  of  a  decreased  money  value  of 
$92,671,807. 

For  the  same  time  in  corn  there  was  a  decrease 
of  46,660,665  bushels,  of  a  decreased  value  of 
$23,054,570,  to  our  export  trade.  And  a  falling 
off,  in  the  article  of  pork,  of  $3,509,570  in  value, 
owing  largely  to  the  fear  of  trichinae  in  American 
pork,  started  by  Chancellor  Bismarck,  in  for- 
bidding its  importation  into  the  German  Empire. 

With  the  richest  wheat  lands  on  the  globe,  why 

it  we  are  falling  behind  in  competing  with  other 
parts  of  the  world  in  export  of  wheat  and  flour? 

The  question  is  easily  answered  and  is  attribut- 
able to  several  causes  : 

1st.  The  cost  of  labor  and  the  enhanced  cost  of 
living  is,  with  us,  out  of  all  proportion  to  that  of 
many  other  countries. 

2d.  Formerly  Russian  agriculture,  under  the 
Boyards,  but  little  more  than  sufficed  for  the 
wants  of  its  own  people.     With  the  abolition  of 


154  STOCK 

serfdom  came  a  new  era.  Those  who  had  been 
slaves  of  the  soil  became  independent,  and  had  a 
stimulus  to  advance  their  own  fortunes.  Agri- 
culture began  to  flourish  as  it  never  had  before. 
Russian  wheat  became  a  staple  article  of  export. 

3d.  The  opening  of  the  Suez  Canal  was  a  promi- 
nent factor  in  the  development  of  Indian  com- 
merce, particularly  in  the  culture  of  wheat  for 
exportation.  Labor  in  India  is  very  cheap  ;  in 
fact  it  is  cents  a  day  where  it  is  shillings  with  us, 
with  board  thrown  in.  The  short  cut  by  canal 
across  the  Isthmus,  instead  of  by  the  long  danger- 
pus  circuit  around  the  African  Continent,  enables 
India  to  lay  her  product  down  in  European  mark- 
ets much  cheaper  than  we  can. 

Our  wheat  is  much  superior,  especially  the  hard 
red  winter  wheat  of  Minnesota  and  Dakota,  to  the 
soft  article  of  India.  If  the  wages  of  labor  and 
cost  of  living  were  equal,  we  need  not  fear  compe- 
tition. But  the  Russian  peasant  can  live  at  much 
less  cost  than  can  our  agricultural  laborers,  while 
the  wages,  including  cost  of  living,  to  the  Indian 
tiller  of  the  soil  represent  but  a  few  cents  a  day. 
So  it  is  that  in  the  profitable  export  of  this  staple 
we  are  at  a  disadvantage. 

The  Indian  Agricultural  Gazette,  published  at 
Calcutta,  gives  an  interesting  account  of  the  prim- 
itive methods  of  agriculture  employed  in  India: 
For  wheat  the  soil  is  cultivated  nine  or  more  times 
during  the  rainy  season  with  an  implement  called 


SPECULA  TION. 


J55 


a  bulthur,  a  small  and  light  grubber,  the  working 
parts  of  which  are  two  wooden  pegs,  which  go  into 
the  ground  and  are  connected  by  an  iron  knife, 
which  runs  through  the  soil  nine  inches  deep. 
This  instrument  is  drawn  by  a  pair  of  oxen.  The 
seed  is  sown  in  November  with  the  use  of  a  deeply 
penetrating  drill,  known  as  the  tifan,  which  has 
three  pegs  shod  with  iron  and  a  hollow  bamboo 
attached  to  each.  The  three  bamboos  converge 
to  a  hopper  in  which  the  seed  grain  is  placed. 
This  drill  penetrates  to  the  depth  of  about  nine 
inches,  and  six  bullocks  are  required  to  draw  it. 
Only  20  lbs.  (one-third  of  a  bushel)  of  wheat  per 
acre  are  sown,  which  is  about  one-fifth  of  the  quan- 
tity sown  in  America,  England,  etc.  The  product 
is  usually  about  450  lbs.,  or  7-J  bushels  per  acre. 
The  crop  takes  three  and  a  half  months  to  mature, 
and  is  usually  cut  with  a  sickle,  but  occasionally 
is  pulled  out  by  the  roots,  after  which  the  grain  is 
trodden  out  by  bullocks.  This  primitive  method 
of  threshing  is  a  serious  drawback  to  Indian  wheat, 
which  contains  a  great  deal  of  dirt  in  consequence. 
It  is  estimated  that  at  least  30,000  tons  of  dirt  and 
foreign  matter  were  transported  with  last  year's 
crop,  entailing  great  expense,  not  only  in  the  way 
of  freight  charges,  but  in  the  removal  of  the  ob- 
jectionable materials  by  special  washing  and  clean- 
ing process  in  milling. 


\T&RARy**K 


TTNT" 


156  STOCK 


CHAPTER  XX. 

THE   COTTON   EXCHANCE. 

THE  first  attempt  to  organize  a  Cotton  Ex- 
change in  New  York  was  made  in  1868.  It 
took  shape  in  the  formation  of  the  New  York 
Board  of  Cotton  Brokers,  and  in  1870  became 
known  as  the  Cotton  Exchange. 

It  began  with  100  names,  and  has  grown  to  a 
membership  of  about  500.  With  the  new  organi- 
zation in  1870,  many  changes  in  the  method  of 
transacting  business  were  introduced.  Dealings 
in  futures  began  to  form  an  important  part  of  the 
business.  This  feature  at  first  excited  a  strong 
prejudice  ;  but  it  has  been  increasing  in  favor  with 
the  cotton  men  ever  since.  Like  all  the  other 
Exchanges,  a  great  deal  of  its  true  legitimate 
business  is  mixed  up  with  pure  speculative  gam- 
bling— a  bulling  up  of  prices  for  one  profit  and  a 
bearing  down  for  another. 

The  new  Cotton  Exchange  building  is  an  im- 
posing edifice,  situated  on  Beaver  Street,  in  the 
immediate  locality  of  the  Custom  House.  It 
cost,  with  the  ground  on  which  it  stands,  over 
$i,0O0,O0O.     The  dimensions  of  the  building  are 


SPECULATION.  157 

%j\  feet  on   Beaver  Street,  116  feet   on  William 
Street,  and  89  feet  on  Pearl  Street. 

It  is  in  the  French  renaissance  style.  The  base- 
ment and  part  of  the  first  story  is  built  of  oolitic 
limestone.     Above  it  is  of  buff  brick  and  terra 

Icotta,  with  a  red  slate  roof. 
From  the  curb  to  the  main  roof  the  height  is 
130  feet  ;  to  the  top  of  the  tower  it  is  156  feet, 
and  the  flag-staff  brings  up  the  height  to  200  feet. 
In  the  main  story  is  the  Exchange  Hall,  or  board 
room,  which  is  108  feet  long,  70  feet  wide,  with 
the  ceiling  35  feet  high.  The  floors  of  the  six 
office  stories  are  of  encaustic  tiles.  There  are 
about  900  tons  of  ironwork ;  the  heaviest  cast 
iron  columns  weigh  about  7,300  pounds  each,  and 
are  28  inches  in  diameter,  and  2  inches  thick; 
these  are  connected  by  wrought  iron  girders, 
weighing  2£  tons,  on  which  the  iron  floor  beams 
rest.  The  roof  and  towers  are  framed  of  iron,  and 
an  iron  framework  suspended  from  the  beams 
above  sustains  the  plastered  ceiling  of  the  main 
room. 


158  STOCK 


CHAPTER  XXL 

PUBLIC   STOCK   EXCHANGES. 

BUCKET  SHOPS,  as  they  are  called  in  deri- 
sion by  the  regular  brokers,  are  very  numerous. 
The  number  in  New  York  city  is  estimated  at 
fifty.  Many  of  these  have  branches  in  various 
cities  and  large  villages  in  other  parts  of  the 
country. 

There  are  clusters  of  them  on  lower  Broadway 
and  New  Street.  Others  are  on  Broad  and  Beaver 
Streets.  Some  are  in  the  locality  of  the  City  Hall 
and  scattered  here  and  there  in  different  parts  of 
the  city.  One  double  building,  running  through 
from  Broadway  to  New  Street,  had  six  of  them, 
all  with  a  large  class  of  customers. 

Some  deal  in  stocks  only ;  others  in  stocks, 
oil,  corn,  wheat,  pork,  lard  and  cotton  futures. 

No  stock,  oil,  grain,  or  provisions  are  actually 
bought  or  sold,  except  in  case  of  necessity.  The 
contracts  are  in  the  nature  of  put  and  call  privi- 
leges, and  in  rare  instances  a  literal  performance 
and  actual  delivery  can  be  required.  Invariably 
the  deal  is  a  pure  gamble  on  the  turn  of  the  mark- 
et.     Customers  want  profits.      The  shops    want 


- 
SPE  CULA  TION.  1 5  9 

profits.  Neither  want  the  article  called  for  by  the 
contracts. 

These  places  are  eyesores  to  the  regular  Ex- 
change men.  They  are  jealous  of  any  competi- 
tion which  draws  away  custom  and  cuts  into  their 
commission  profit  account.  That  this  jealousy  is 
well  founded  can  readily  be  seen,  when  it  is 
alleged  that  the  aggregate  business  of  the  bucket 
shops  is  often  larger  than  that  of  the  Stock  Ex- 
change. 

The  bucket  shops  were  long  since  deprived  of 
direct  quotations  from  the  Stock  Exchange  over 
the  Gold  and  Stock,  and  the  Commercial  Com- 
pany's indicators.  But  they  get  their  quotations 
all  the  same,  in  an  indirect  way,  by  private  wires 
and  telephones  from  unsuspected  allies. 

One  shop  was  said  to  get  its  quotations  by  the 
roundabout  way  of  Poughkeepsie.  Some  have 
five  or  six  telephones,  in  a  row,  on  the  walls  of 
their  private  office,  so  that  if  information  fails  in 
one  direction  they  can  get  it  instantly  from  an- 
other. The  Exchange  brokers  growl  and  threaten, 
but  are  powerless.  They  are  a  unit  in  favor  of 
legislation  to  close  the  bucket  shops,  but  when  it 
comes  to  legal  interference  with  their  own  prac- 
tices, they  harp  on  another  string. 

In  the  Winter  of  1886-7  Senator  Vedder  intro- 
duced a  bill  in  the  New  York  Legislature,  propos- 
ing to  levy  a  tax  of  one-fiftieth  of  1  per  cent,  on 
speculative  transactions  in  stocks,  bonds,  wheat, 


160  STOCK 

cotton  and  other  articles.  This  in  effect  was  a  tax 
on  all  purchases  or  sales  on  margins  which  make 
up  the  bulk  of  the  business  done  at  the  Ex- 
changes, and  practically  all  of  that  done  at  the 
bucket  shops. 

A  committee  of  the  Senate  took  testimony  in 
New  York  as  to  the  effect  of  such  a  tax.  Stock 
and  Produce  Exchange  men  fought  it  tooth  and 
nail,  denouncing  it  as  "  a  tax  on  commerce  and  a 
boycott  on  their  business  ;"  and  a  threat  that  if 
such  a  bill  became  a  law,  it  would  cause  the  re- 
moval of  the  Exchanges  out  of  the  State  to  Jersey 
City.  They  said  :  "  If  you  want  to  do  away  with 
the  bucket  shops  make  laws  to  that  effect." 

Now,  in  a  moral  point  of  view  there  is  no  dif- 
ference whether  one  gambles  on  I  per  cent,  mar- 
gins and  upwards  at  the  bucket  shops,  on  on  5  or 
10  per  cent,  margins  at  the  Exchanges.  The  effect 
is  just  as  demoralizing  in  one  as  in  the  other. 

The  only  difference  is  the  brokers  will  buy,  own 
and  carry,  or  sell  short  and  carry  stock  on  custom- 
ers' orders,  for  fat  commissions,  if  they  are  pro- 
tected by  sufficient  margin  against  loss.  On  the 
other  hand  the  customers,  other  than  investors, 
never  intend  to  pay  for  and  possess  the  stock  they 
order  bought,  or  they  do  not  own  and  cannot  de- 
liver the  stock  they  order  sold  short.  They  simply 
play  a  game  of  chance  on  the  turn  of  the  market, 
just  as  the  man  who  puts  down  a  sum  of  money 


SPECULA  TION.  1 6 1 

on  a  card  or  faro  board  plays  a  game  of  chance  on 
the  turn  of  the  pack. 

Between  the  bucket  shops  and  their  customers 
it  is  a  game  of  chance,  pure  and  simple,  with  no 
pretense  of  handling  any  stock  at  all.  And  this 
game  of  chance  turns  on  the  game  played  at  the 
Stock  Exchange  itself,  or  on  the  deals  in  oil, 
grain,  provisions  and  cotton. 

Comparing  the  evils  of  gambling  in  the  Stock 
Exchange  banking  and  brokerage  offices  with 
that  of  the  bucket  shops,  the  latter  are  by  far  the 
less  harmful  and  costly.  If  a  man  is  bound  to 
speculate  and  begins  small  in  these  shpps,  his 
chances  for  profits  are  just  as  good,  and  he  can  get 
his  eye  teeth  cut  at  far  less  expense  than  under  the 
influences  in  the  banker-broker  offices,  where  he 
will,  only  too  often,  be  roped  in  and  out  of  ven- 
tures and  milked  for  fat  commissions. 

In  the  other  places  the  game  is  between  the 
shops  and  their  customers :  the  interests  of  one 
side  are  antagonistic  to  that  of  the  other.  For  the 

I  shop  men,  to  bring  influences  to  bear  to  induct 
customers  into  this  or  that,  would  be  useless  and 
only  arouse  suspicion. 

At  the  Stock  Exchange  the  real  trouble  is  that 
the  business  is  run  in  the  interest  of  the  brokers 
and  the  big  manipulators,  and  not  of  the  public  at 
their  back.    Interest  is  charged  at  6  per  cent,  even 

then  stocks  can  be  carried  at  2  per  cent.     Shaves 
e   demanded  of  the  short  interest  and   not  al- 


1 62  STOCK 

ways  credited  to  those  long  of  the  stocks  lent, 
unless  the  customers  keep  a  sharp  lookout  and 
question  their  brokers,  when  they  see  by  the 
news  tissues  that  a  loaning  rate  is  imposed.  And 
commissions  are  %  per  cent,  on  a  turn  in  each  ioo 
shares. 

In  the  bucket  shops  there  is  no  interest  to 
pay  and  no  loaning  rates.  The  commissions  are 
only  one-eighth  per  cent.,  except  on  deals  closed 
out  the  same  day  as  made,  when  it  is  one-eighth 
each  way. 

To  illustrate  how  much  more  dangerous  mar- 
gin gambling  is  in  a  broker's  office  than  in  a 
bucket  shop  : 

Suppose  a  man  buys  ioo  shares  of  Lackawanna 
at  $135  a  share  on  a  margin  of  $1,000.  100  shares 
at  135  is  $13,500.  Now,  if  the  price  should  go 
below  135  and  he  holds  on  for  sixty  days  and 
his  margin  is  not  wiped  out,  he  would  be  charged 
interest  on  cost  and  be  credited  with  interest  on 
his  margin,  making  a  difference  against  him  of 
$125,  besides  the  loss  he  stood  for  on  the  stock 
and  the  commissions.  If  the  deal  was  closed 
in  60  days  by  the  loss  of  his  margin,  he  would  be 
out  of  pocket  $1,000  on  margin,  $125  on  interest, 
and  $25  on  commissions.     Total  loss,  $1,150. 

If  he  was  a  bear  and  sold  the  same  thing  short 
on  the  same  margin,  if  the  market  went  against 
him,  and  he  held  on  and  the  stock  was  squeezed 
with  a  loaning  rate  of  -J-  or  $12.50  one  day  ;   1  per 


■ 


SPECULA  TION.  1 6  3 

ent.   or  $100  the   next  day,  and  4  per  cent,  or 
400  the  third  day,  his  loss  with  his  margin  wiped 
out  would  be  $1,000  on  margin  ;  $512.50  on  loan- 
ing rates,  and  $25  on  commissions.     Total  loss, 
$1,537.50. 

However,  if  the  customer  was  unable  to  put  up 
more  margin,  or  make  good  any  deficit,  the  broker 
would,  for  his  own  protection,  close  him  out  before 
the  margin  was  exhausted.  This  the  broker  is 
not  always  able  to  do,  for  events  happen  like  a 
stroke  of  lightning.  In  such  a  case,  the  broker 
would  harry  his  customer  with  a  law  suit  and  a 
judgment  for  the  deficit,  and  perhaps  place  him 
on  the  jail  limits  for  debt. 

In  the  bucket  shops  the  usual  way  is  to  put  up 
1  per  cent,  margin,  and  to  this  additional  margins 
can  be  added  any  time  before  the  margins  that 
are  on  are  exhausted.  Hence  a  man  can  take  the 
chances  on  100  full  shares  of  Lack,  by  putting  up 
I  per  cent.  If  the  price  declines  one  point  before 
he  has  put  on  more  margin,  his  contract  is  wiped 
out  and  he  loses  $100,  but  no  more.  If  he  has 
made  his  margin  2  per  cent,  and  the  price  declines 
to  that  extent  with  no  more  margin  put  on,  he 
loses  $200.  If  the  whole  market  is  weak  and 
declining  he  will  generally  drop  out  of  the  deal 
with  this  loss.  If  he  was  a  bear  and  went  short 
with  the  market  against  him,  the  same  losses 
would  result  in  a  reverse  ratio.  There  is  no  such 
hing  as  interest  and  loaning  rates  in  the  bucket 


1 64  STOCK 

shops  to  add  to  his  losses.  The  commissions  are 
included  in  the  margins  he  lost. 

The  business  is  conducted  fair,  square  and  above 
board.  The  quotations  are  the  prices  made  at  the 
New  York  Stock  Exchange,  and  are  announced 
by  the  caller  and  posted  on  the  boards  by  the 
marker,  without  any  appreciable  loss  of  time. 

The  manipulation,  trickery  and  rumors  to  lead 
or  mislead,  all  originate  from  those  who  operate  at 
the  big  machine.  These  things  have  the  same 
influence  with  the  customers  at  the  bucket  shops 
as  with  the  other  class  of  speculators  at  the  brokers' 
offices.  The  shops  have  nothing  to  do  with  trick- 
ery, manipulation  and  the  rumor  mill.  That  is  all 
done  for  them  to  perfection. 

The  bucket  shops  are  generally  large  rooms, 
with  a  space  partitioned  off  for  the  telegraph 
operators,  caller,  book-keepers  and  cashier,  the 
dividing  partition  being  about  five  feet  high.  The 
boards  on  which  the  quotations  are  posted  on  large 
print  cards,  are  opposite  or  on  one  side  within  full 
view  of  the  caller  and  clerks. 

The  first  parallel  column  on  the  boards  gives 
the  closing  quotations  of  the  day  before. 

Next  under  are  the  abbreviated  designations  of 
the  various  stocks  dealt  in,  and  the  quotations 
are  carried  down  from  them  in  horizontal  columns. 
See  table  illustrated. 


SPECULA  TION. 


•65 


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1 66  STOCK 

If  there  are  any  underhand  dealings,  it  may  be 
the  managers  find  on  inspecting  their  books,  after 
the  close  of  the  day's  business,  that  they  have  say 
15,000  shares  out  at  the  main  and  branch  offices, 
with  the  customers  on  the  right  side  against  them. 
In  such  a  case  what  is  to  hinder  the  bucket  shops 
from  buying  or  selling  3,000  or  4,000  shares  at  the 
Stock  Exchange  with  a  view  of  turning  the  market 
in  a  contrary  direction  to  wipe  out  the  profits,  if 
not  the  margins,  on  the  15,000  shares  held  against 
them  ?  If  the  trick  succeeds,  of  course  they  can 
skin  their  customers  and  close  out  the  3,000  or 
4,000  shares  at  the  Stock  Exchange  at  a  good  pro- 
fit besides. 

All  the  bucket  shops  make  contracts  on  1  per 
cent,  margins  and  upwards.  In  some  the  margins 
and  profits  are  unlimited.  In  others  the  liabili- 
ties are  limited  to  5  per  cent.,  to  3  per  cent.,  and 
sometimes  to  1  per  cent,  on  certain  very  erratic 
stocks.  Sometimes  also  the  margin  put  up  is 
limited  to  5  per  cent. 

The  chances  of  guessing  the  market  are  the 
same  here  as  at  the  Stock  Exchange.  As  a  rule 
customers  guess  wrong  from  three  times  out  of 
five  to  four  times  out  of  six  in  the  long  run.  The 
bucket  men  know  this  and  calculate  on  it,  that  the 
margin  of  profit  in  the  long  run  is  largely  in  their 
favor. 

Still  the  business  is  not  always  profitable.    The 


SPECULATION.  167 

bull  market  in  1885  ran  so  long  one  way,  it  was 
like  bucking  against  fate  to  go  short  of  it.  The 
margins  of  those  who  took  the  bear  side  as  prices 
advanced,  were  wiped  out  to  the  immense  profit 
of  the  shops.  When  the  crowd  turned  and  caught 
on  right  it  was  like  picking  up  money  in  the  street. 
Almost  every  venture  brought  profits,  and  the 
bucket  shops  suffered  terribly,  some  of  them  being 
compelled  to  bust. 

The  exhaustion  of  the  boom  left  the  crowd 
thoroughly  imbued  with  bull  sentiments,  and  as 
long  as  they  continued  to  operate  on  that  side 
their  margins  were  wiped  into  the  money  drawers 
of  the  bucket  men  at  a  great  rate. 

One  shop  issued  dodgers,  offering  to  take  risks 
on  from  5  to  5,000  shares  of  stock,  and  on  from 
$00  to  500,000  bushels  of  grain  at  a  single  quota- 
tion, and  correspondingly  on  pork  and  lard. 

No  grain  or  provisions  are  ever  handled,  or 
intended  to  be.  If  any  are  seen,  it  must  be  the 
crackers,  cheese,  bologna,  and  an  inch  square  piece 
of  pork,  in  the  centre  of  a  pan  of  baked  beans,  on 
the  free  lunch  sideboard,  in  the  basement  saloon 
down  below. 

Some  shops  which  combine  stocks  and  oil  with 
deals  in  grain  and  provisions,  have  a  posted  scale 
for  margins  on  deals  based  on  Chicago  quotations 
for  corn,  wheat,  pork  and  lard,  viz : 


168  STOCK 

Margin  on  grain  at  one  cent  per  bushel. 

$5  buys  or  sells 500  bushels. 

10     "       "       "    1,000         " 

100     "       '*       ■*   10,000         " 

1,000     '*       "      "   100,000         " 

On  pork  at  25  cents  per  barrel. 

$6.25  buys  or  sells 25  bbls. 

12.50     "       "     "     50     M 

25.00     "       "     "     100     ** 

250.00     "       "     "     1,000     " 

2,500.00     "       "     "      10,000     " 

On  lard  at  48  cents  per  tierce. 

$12  buys  or  sells 25  tierces. 

24     "       "     "     50 

48     "       "     "      100       " 

480     "       "     "     1,000 

4,800     u       '*     "     10,000       " 

On  stocks  at  one  per  cent. 

$10  buys  or  sells 10  shares. 

100     "       "     -      100       " 

1,000     "       "     "      1,000       " 

Some  shops  limit  the  number  of  shares  to  100 
or  200  on  a  single  deal.  But  few  will  make  con- 
tracts on  over  1,000  shares  at  one  quotation.  The 
lowest  limit  is  5  shares  in  all  of  them. 

Orders  must  be  handed  in,  and  contracts  closed 
out  when  the  figures  are  fresh  on  the  boards.  One 
class  of  stocks  may  be  active  and  advance  or  decline 
one  or  two  points,  when  the  prices  of  another  class 
remain  stationary.     To  expect  the  shops  to  make 


SPECULA  TION. 


169 


contracts  based  on  old  quotations,  which  are  one  or 
two  per  cent,  below  the  movements  of  the  rest  of 
the  market,  would  be  unjust ;  for  these  stocks 
which  have  not  moved  will  often  spurt  up  or 
down  a  half  or  a  full  point  at  a  single  jump  to 
catch  up  to  the  others.  One  class  of  stocks  carry 
the  others  up  or  down  with  them  in  sympathy. 

Customers  make  their  own  selections  of  stock 
and  price  as  the  quotations  appear. 

Orders  with  a  margin  are  handed  in,  which,  if 
prices  agree  with  those  fresh  on  the  boards,  are 
accepted  and  contracts  made.  These  the  cus- 
tomer can  close  out,  at  his  will,  to  catch  a  profit, 
or  to  stop  a  loss,  any  time  before  the  margin  is 
exhausted,  from  the  last  figures  fresh  on  the  boards. 
Settlements  are  made  promptly.  The  contracts 
have  ninety  days  to  run. 

Copies  of  contracts  are  similar  to  the  follow- 
ing, with  variations : 


No. 


$ 


Purchase. 


New  York,  March  1,  1887. 

For  value  received  Mr. ,  or  bearer,  may 

call  on  us  for  10  shares  Union  Pacific  Stock  at 
any  time  within  ninety  days  from  this  date,  at 
55^,  provided  said  stock  is  called  for  and  full 
payment  made  for  the  same  before  the  price  has 
declined  to  54^  at  the  New  York  Stock  Exchange. 

BUCKEM  &  CO. 


Exhausts  at 


54 


i7o 


STOCK 


No. 


I 


Sale. 

New  York,  March  x,  1887. 

For  value  received  Mr. ,  or  bearer,  may 

deliver  to  us  10  shares  Union  Pacific  Stock  at 
any  time  within  ninety  days  from  this  date,  at 
55^  per  cent,  of  par  value,  provided  delivery  is 
made  before  the  price  for  same  has  advanced  to 
56^  at  the  New  York  Stock  Exchange. 

BUCKEM  &  CO. 


Exhausts  at 


56 


Additional  margins,  if  put  on,  are  carried  down 
in  the  cash  column,  and  the  exhaust  limit  is  ex- 
tended in  proportion. 

People  do  not  lose  money  as  fast  in  these  places, 
as  those  who  speculate  through  brokers  at  the 
Stock  Exchange.  The  reason  is  the  brokers  usu- 
ally want  $1,000  margin  for  their  own  protection, 
then  if  the  market  goes  against  their  customers 
their  advice  always  is  to  ''hold  on."  They  hold 
on  too  long,  until  the  larger  part  of  the  margin  is 
exhausted,  and  then  throw  over  their  stock.  To 
do  a  decent  business  they  must  handle  at  least 
100  shares  of  stock  at  a  time,  or  they  are  of  no 
account. 

Interest,  loaning  rates  and  double  commissions 
are  exacted.  What  wonder  then  that  people  flock 
down  to  the  bucket  shops,  where  the  chances  of 
speculation  are  just  as  good,  the  cost  nothing  but 
a  one-eighth  commission  and  the  risk  only  the  one 
per  cent,  or  two  per  cent,  margin  they  put  up  ? 


SPECULA  TION.  1 7 1 

The  big  manipulators  of  the  stock  market  can 
take  up  pools  of  one  hundred  or  two  hundred 
millions  of  dollars.  They  have  the  power  to 
boom  up  prices,  figuratively,  as  high  as  Gilderoy's 
kite.  But  unless  they  can  draw  in  an  army  of 
small  purse  people  to  buy  their  stuff,  they  cannot 
get  out  again  with  the  profits  they  are  after. 

The  withdrawal  of  so  many  small  operators 
from  the  brokers'  offices  to  the  bucket  shops 
often  works  to  foil  the  conspiracies  of  the  great 
Moguls  of  "  the  Street,"  whose  plan  was  to  leave 
every  fool  in  the  lurch  in  the  final  culmination  of 
their  schemes. 

There  are  times  when  the  bucket  shops  of  New 
York  probably  do  four  times  the  business  done  in 
the  main  temple  of  Mammon.  The  brokers  growl 
and  threaten  retaliatory  measures  of  all  sorts,  at 
which  the  bucket  men,  metaphorically,  only  put 
their  thumbs  to  their  noses  and  wiggle  their 
fingers. 

The  business  is  a  lucrative  and  profitable  one  to 
the  brokers.  But  it  is  an  immensely  losing  one 
to  the  general  run  of  their  customers. 

The  business  is  a  losing  one  to  the  players  at 
the  bucket  shops,  else  how  could  these  places 
thrive  and  pay  high  rents,  gas,  electric  light  and 
telegraph  bills,  and  furnish  a  living  to  the  proprie- 
tors and  a  squad  of  clerks  ? 

As  to  legislative  action  to  close  these  places  : 
in  the  Winter  of   1885-6  Assemblyman  Cantor  in- 


172  STOCK 

troduced  a  bill  to  close  the  bucket  shops.  Those 
interested  only  laughed  and  predicted  it  could  not 
be  done.     And  nothing  was  done. 

They  argued  that  if  such  a  bill  were  to  become 
a  law,  it  would  close  out  all  dealings  in  privileges 
dealt  in  by  the  big  men  of  the  stock  market. 

The  reader  will  observe  that  the  bucket  shop 
contracts  are  in  the  nature  of  privileges,  in  which 
stock  may  be  "called  for"  from,  or  "delivered 
to  "  the  makers  of  the  contract.  Now  any  cus- 
tomer may  tender  full  pay  for,  and  demand  the 
stock  specified  in  his  "  Purchase "  contract,  or 
he  may  have  stock  which  he  can  put  to  the  maker 
of  his  "  Sale  "  contract  and  demand  the  full  price 
as  stated  therein.  In  such  a  case  the  makers 
could  be  compelled  to  a  literal  performance.  This, 
however,  is  not  required.  All  the  customers  want 
is  their  profits  which  they  get. 

Just  such  a  case  as  this  happened  in  1886.  A 
certain  stock  was  very  erratic,  with  wide  fluctua- 
tions. One  man  took  contracts,  on  the  bull  side, 
on  1,000  shares  of  it.  The  market  went  his  way, 
and  one  day  he  saw  a  profit  of  $10,087.50  in  sight. 
He  handed  in  his  contracts  to  be  closed  out ;  but 
the  bucket  man  demurred  that  the  sum  was  too 
large,  and  offered  him,  as  alleged,  $3,000  to  settle. 
This  he  would  not  accept.  He  then  took  counsel, 
obtained  about  $70,000,  and  with  this,  as  alleged, 
he  tendered  full  payment,  and  demanded  the  stock, 
which  was  refused.     Suit  was  then  brought,  and 


SPECULA  TION.  I J  3 


an  Examiner  was  appointed  by  a  Justice  of  the 
Supreme  Court  to  take  testimony.  The  result 
was  the  bucket  men  raised  their  offer  to  $5,000  to 
settle,  and  in  the  end  the  whole  thing  was  com- 
promised for  $8,000,  without  a  trial,  if  the  reports 
in  the  papers  are  to  be  relied  on. 

The  bucket  shops  are  very  careful  to  keep  so 
near  the  legal  line  that  any  legislation  against 
them  will  embrace  the  Stock  Exchange  brokers 
as  well.  Some  of  them  give  notice  on  their 
printed  orders  and  contracts  that  they  "  solicit 
and  will  receive  no  business  except  with  the 
understanding  that  the  actual  delivery  of  property 
bought  or  sold  upon  orders  is  in  all  cases  con- 
templated and  understood." 

However  well  the  thing  may  be  understood,  all 
that  continues  to  be  wanted  is  the  profits,  without 
the  delivery  of  the  article  specified. 

There  are  rich  speculators  in  the  bucket  shops 
as  well  as  the  wrecks  of  the  Street  who  come  there 
from  the  brokers'  offices. 

BUCKET   SHOP   MORALITY. 

The  following  are  some  of  the  arguments  and 
specious  sophistry  used  by  bucket  shop  men  in 
defense  of  their  business.  The  same  arguments 
and  line  of  reasoning  apply  with  the  brokers  when 
they  offer  excuses  for  their  share  of  the  business. 
Says  the  bucket  man  : 


174  STOCK 

''Always  bear  in  mind  that  'points'  are  worth- 
less, and  that  all  speculation  is  '  guesswork.'  The 
least  informed  individual  is  just  as  liable  to  prove 
a  profitable  'guesser'  as  the  most  experienced 
Wall  Street  speculator." 

"  A  great  many  good  and  pious  people  declare 
that  the  stock  speculator  is  a  mere  gambler,  and 
hence  stock  speculation  must  be  avoided  by  all 
reputable  people." 

"  This  criticism  is  born  of  antiquated  dry  rot. 
It  may  have  been  orthodox  among  the  Puritans 
when  they  hovered  about  Plymouth  Rock,  but  the 
country  has  outgrown  the  blue  laws  period." 

"  It  is  just  as  lawful  to  buy  stocks  when  a  limited 
demand  makes  them  cheap,  and  sell  them  when  an 
active  demand  causes  them  to  rise,  as  it  is  to  buy 
or  sell  any  product  of  nature." 

"  Stock  speculation  presents  the  best  avenue  yet 
discovered  for  the  exercise  of  the  irrepressible  ac- 
tivity of  the  American  character.  To  stigmatize 
it  as  gambling,  in  the  ordinary  sense  of  the  term, 
is  nonsensical  and  slanderous." 

"  It  is  tremendously  attractive  to  the  sharp, 
aspiring  Yankee,  who  is  boiling  over  with  a  desire 
to  get  rich  quick,  because  he  sees  a  chance  to  get 
larger  sums  on  a  smaller  risk,  in  quicker  time  than 
in  any  other  way." 

"  He  knows  that  it  is  largely  a  matter  of  chance, 
and  that  it  does  not  in  any  way  interfere  with  his 


being  a  moral  man  and  a  good  citizen,  therefore 
he  embarks  in  it." 

"  Stocks  and  securities  represent  the  property 
of  the  corporations  which  issue  them,  each  certifi- 
cate being  entitled  to  its  pro  rata  share  of  the 
same,  and  there  is  no  legal  or  moral  reason  why 
they  should  not  be  purchased  and  sold  in  the 
market  precisely  the  same  as  any  merchantable 
commodity." 

"  Merchants  buy  a  hundred  barrels  of  pork  or 
lard  for  purposes  of  trade  and  profit.  They  hold 
these  for  an  advance,  and  generally  sell  when  it 
comes.  Men  buy  a  hundred  shares  of  stock  on 
the  same  principle,  and  sell  for  the  same  reason. 
They  engage  in  trade  to  make  money.  They  buy 
and  sell  stocks  to  make  money.  It  is  a  struggle 
to  get  rich  in  both  cases,  and  philanthropy  plays 
no  figure  in  the  race." 

"  As  long  as  men  stand  a  chance,  by  trading  in 
stocks,  to  make  from  500  to  1,000  per  cent,  more 
money  in  one-fiftieth  of  the  time,  and  with  one- 
fiftieth  of  the  risk  (sic  ?)  than  they  can  realize  by 
trading  in  merchandise,  they  will  select  stocks  in 
preference.  This  is  the  Alpha  and  Omega  of  the 
whole  business." 

THE   REALITY. 

The  subtle  reasoning  and  fallacious  arguments 
in  the  foregoing  are  very  eloquent,  plausible,  and 
fine  in  theory.     The  arch  enemy  of  mankind  once, 


176  STOCK 

upon  a  time  at  least,  was  just  as  eloquent,  plausi- 
ble and  theoretical. 

In  point  of  fact,  the  investor  who  buys  stocks 
and  bonds  ;  the  merchant  who  buys  grain,  pork, 
lard,  or  any  other  species  of  merchandise  and  has 
it  delivered  to  him,  becomes  the  absolute  owner 
of  real  tangible  property.  These  men  who  own 
and  hold  stocks,  bonds,  grain,  pork,  etc.,  for  an 
advance  make  an  honest  profit  by  selling  when  it 
comes,  and  give  an  honest  value  in  the  delivery  of 
actual  property. 

There  is,  and  can  be,  no  analogy  between  the 
men  who  own  real  tangible  property  and  make  an 
honest  profit  out  of  it,  and  the  men  who  put  up 
margin  to  make  a  gambling  profit  out  of  wind 
they  do  not  own,  out  of  atmosphere  they  cannot 
grasp,  and  out  of  gas  they  cannot  confine. 

It  is  right  in  between  these  two  classes  of 
traders  that  philanthropy  does  come  in  and  plays 
a  tremendous  moral  figure  in  the  race.  The  bucket 
shop  speculators  simply  make  bets  on  chances 
with  nothing  tangible  back  of  it  for  delivery.  The 
margin  speculators,  at  the  brokers'  orifices  are  in 
the  same  boat  :  they  make  bets  on  chances,  with 
nothing  back  of  it  that  they  actually  own,  or  in- 
tend to  own,  and  can  deliver.  Besides  this  they 
bet  on  chances  to  make  a  profit  at  the  expense 
and  loss  of  some  one  else  who  gets  no  value. 


SPECULATION.  177 

THE   EFFECT. 

In  effect  the  whole  business  of  dealing  in  stocks, 
oil,  grain,  provisions  and  cotton  futures  on  mar- 
gins, as  practiced  by  the  Stock,  Produce,  Petro- 
leum and  Cotton  Exchanges  and  the  Bucket 
Shops,  with  the  attendant  trickery,  deception  and 
manipulation  to  allure  in  and  mulct  the  people  by 
wholesale,  is  debasing  and  demoralizing  to  a  far 
greater  degree  than  any  other  legal  or  illegal  busi- 
ness on  the  American  Continent. 

The  votaries  of  the  game  of  chance  become 
absorbed  and  enslaved  by  hallucination  in  the 
hazardous  business.  When  they  have  been  cleaned 
out  to  the  extent  that  they  can  no  longer  swing  a 
hundred  share  lot  at  the  brokers'  offices,  they  de- 
scend down  on  the  bucket  shops  and  continue  the 
game  as  long  as  they  can  put  up  the  lowest  limit 
of  margin. 

The  business  brutalizes  the  mind,  and  to  a  more 
or  less  extent  hardens,  if  it  does  not  destroy,  the 
finer  feelings  of  the  human  heart. 

The  bucket  shop  men  are  far  more  honest  and 
innocent  in  this:  that  they  do  not  make  or  un- 
make the  market,  or  work  the  inhuman  machinery 
of  allurement  and  deception.  That  is  all  done  for 
them.  They  honestly  present  the  market  as  it  is 
made  by  the  superior  powers  and  influences.  The 
contracts  are  made  on  the  basis  of  the  customer's 
own  guess  and  selection. 
13 


I 


178  STOCK 

There  may  be  one  chance  that  a  man  can  get 
suddenly  rich  at  the  vicarious  game.  But  there 
are  ninety-nine  chances  that  he  will  not  make  a 
big  strike  and  retire  with  it.  He  will  risk  it  again 
and  again  until  it  disappears. 


SPECULA  TION.  1 79 


CHAPTER  XXII. 

A  LOWER   SCALE   OF  GAMBLING. 

N  December,  1886,  there  was  opened  in  New- 
Street  a  room,  which  was  an  original  improve- 
ment on  the  bucket  shop  method  of  bucking  the 
tiger.  Quotations  of  stocks  actually  bought  and 
sold  at  the  markets  were  done  away  with.  In 
place  of  the  stock  ticker,  there  was  a  clock  with  an 
annunciator  which  rings  every  half  minute  or  so. 
At  every  ring  figured  cards  fall  from  some  hidden 
receptacle  inside  the  clock  and  the  figures  on  the 
cards  state  that  D.  N.  has  declined  •§■,  or  that  T.  P. 
M.  has  advanced  J,  or  O.  T.  has  improved  -J,  etc. 
A  boy  marker  records  this  on  the  boards  under 
the  letters  indicated. 

On  one  of  the  walls  of  the  room  was  a  blackboard 
divided  into  five  panels.  At  the  top  of  these 
panels  were  the  letters  D.  L.  B. ;  T.  P.  M. ;  J.  M. 
C.  ;  D.  N.,  and  O.  T.  From  these  letters  the 
figures  which  came  out  on  the  cards  from  the 
clock  were  carried  down  the  columns. 

What  these  initials  represented  the  crowd  in 
the  room  did  not  know.  O.  T.  might  mean  Ore- 
gon Trans-Continental,  but  it  did  not,  for  that  stock 
was  quoted  at  the  New  York  Stock  Exchange  in 


180  STOCK 

the  thirties,  and  here  O.  T.  was  being  bought  or 
sold  at  113  to  115.  The  fact  was  that  the  initials 
represented  fictitious  things  and  stood  in  the  place 
of  real  stocks.  If  the  manager  or  assistants  in  the 
shop  were  asked  for  explanations,  they  replied 
humorously  that  D.  L.  B.  meant  Delaware  Lug- 
gage Bureau  ;  T.  P.  M.,  Toledo  Postmaster,  and 
so  on  to  the  end  of  the  chapter. 

Late  in  the  afternoon  the  blackboards  would  be 
white  with  figures,  and  the  room  crowded.  The 
record  on  the  boards  showed  that  these  fictitious 
stocks  had  fluctuated  up  and  down  during  the 
day  within  a  limit  of  five  points.  Nearly  every- 
body had  a  shabby,  hungry  look. 

Margins  did  not  exceed  $5,  and  were  generally 
less  than  half  that  sum.  Quotations  were  ground 
out  on  time,  there  was  no  weary  waiting.  Money 
that  was  lost  or  occasionally  made,  was  lost  or  made 
promptly. 

The  thing  was  gambling  pure  and  simple.  The 
figures  come  out  on  the  principle  of  a  battery, 
worked  to  turn  the  margin  of  profits  in  favor  of  the 
bank,  no  matter  which  way  the  crowd  bet.  It  had 
the  advantage  of  not  being  obliged  to  close  up  when 
business  hours  were  over,  but  could  keep  on  run- 
ning as  long  as  the  presence  of  the  crowd  made  it 
profitable.  This  place  was  pulled  by  the  police 
after  a  few  days. 

Later  in  the  Winter  another  concern,  calling  it- 
self "  The  Indicator  Stock  Exchange,"  was  started 


SPECULA  TION. 


181 


on  another  street,  and  purported  to  have  offices 
at  New  York,  Baltimore  and  Washington.  The 
quotations  seemed  to  come  in  by  telegraph.  The 
peculiar  stocks  dealt  in  were  just  as  mysterious  as 
in  the  concern  first  mentioned.  The  order  blanks 
to  buy  or  sell  were  under  the  heading  :  "  We  solicit 
and  receive  no  business,  except  with  the  under- 
standing that  the  actual  delivery  of  property 
bought  or  sold  upon  orders  is  in  all  cases  contem- 
plated and  understood."  This  doubtless  was  a 
blind  against  legal  interference. 


1 82  STOCK 


CHAPTER  XXIII. 

BIG  BUSINESS   ON   SMALL  CAPITAL. 

THERE  are  Stock  Exchange  brokerage  firms 
with  not  over  $25,000  cash  capital.  These 
are  considered  very  weak ;  $100,000  capital  is 
decent,  but  not  strong  ;  $500,000  capital  is  strong 
and  respectable,  while  those  houses  which  can 
show  $1,000,000  and  upwards  are  called  A  1,  gilt 
edged. 

The  following  will  no  doubt  be  a  curious  exhibit 
of  how  a  firm's  credit  may  be  stretched  and  an 
enormous  business  done  on  a  very  small  capital, 
comparatively.  Speculators  take  terrific  risks  to 
make  big  profits  on  a  turn  of  the  market.  Stock 
houses  take  enormous  risks  to  extend  their  busi- 
ness and  increase  their  commission  profits. 

A  firm's  own  capital  is,  say $100,000 

5  Customers  put  up  margins  of  $50,000 

each 250,000 

10  Customers  put  up  margins  of  $25,000 

each 250,000 

20  Customers  put  up  margins  of  $10,000 

each 200,000 

20  Customers  put  up  margins  of  $5,000 

each     100,000 


SPECULATION.  183 

20  Customers  put  up  margins  of  $1,000 

each $20,000 


I 


The    firm    has    capital   and  margin   in 

hand  of $920,000 


Speculative  stocks  may  range  in  price  from  $140 
a  share  for  gilt-edged  down  to  $10  a  share  for  the 
cats  and  dogs.  Usually  there  will  be  more  of  the 
medium  and  low-priced  stocks  bought  for  specula- 
tion than  of  the  high-priced  ones.  So,  calling  the 
average  price  $60  a  share,  a  stock  firm  can  use  the 
stocks  they  have  paid  for  to  hypothecate  as  col- 
lateral to  the  banks  for  loans  of  money  with  which 
to  buy  and  pay  for  more  stock.  This  system  of 
hypothecating  and  buying  and  rehypothecating 
for  money  to  buy  can  be  carried  to  an  almost 
indefinite  extent  before  the  credit  to  borrow 
money  and  the  ability  to  buy  stock  is  exhausted. 
The  banks  will  loan  about  80  per  cent,  of  market 
value  on  good  stock  collateral.  The  following 
figures  will  illustrate  the  process  : 

Stock  firm  with  capital  and  margin  in 

hand  of $920,000 

This,  at  $60  per  share,  will  buy  and  pay 

for  shares 1 5,300 

15,300  shares,  at  80  per  cent,  of  value, 
borrows $734,400 

$734,400  pays  for  shares 12,200 

12,200  shares  borrows $585,600 


1 84  STOCK 

$585,600  pays  for  shares 9,700 

9,700  shares  borrows $465,600 

$465,600  pays  for  shares 7,700 

7,700  shares  borrows $369,600 

$369,600  pays  for  shares 6,100 

Here  would  be  51,000  shares  of  stock  bought 
and  $3,075,200  of  stock  firms'  capital,  customers' 
margins  and  money  borrowed  on  stock  collateral 
— all  on  a  basis  of  $100,000  of  the  firms'  own  capi- 
tal; and  the  last  6,100  shares  of  stock  bought 
could  be  hypothecated  for  $292,800  more  money. 
To  carry  the  thing  to  the  extreme  limit  of  buying 
and  borrowing  credit  capacity  is  unnecessary,  as 
the  foregoing  is  sufficient  to  give  an  idea  of  the 
tremendous  risks  taken  by  Wall  Street  men. 

This  system  of  doing  a  big  business  on  a  small 
capital  is  a  common  practice,  and  is  probably  often 
carried  Jpeyond  the  extent  here  shown.  Stocks 
are  bought,  paid  for  and  carried  on  10  per  cent, 
margins,  or  even  less,  by  the  broker  firms  for  their 
customers.  The  firms'  margin,  or  pawn,  the  stocks 
they  carry  to  the  banks  to  obtain  more  money  to 
buy  more  stock.  If  the  banks  lend  80  per  cent. 
of  the  market  value  on  the  stock,  it  is  equivalent 
to  20  per  cent,  of  margin  against  the  banker-brokers 
as  a  protection  from  loss  by  a  decline  in  the  market. 
The  banks  lend  their  money  conditionally  that 
they  can  call  in  their  loans  at  any  time,  or  that 
the  brokers  must  put  up  more  margin  to  protect 


SPECULATION.  185 

the  banks  on  their  loans.  If  the  banker-brokers 
fail  to  return  the  money  when  called  for,  the  banks 
will  throw  their  stock  collateral  on  the  market  to 
save  themselves  from  loss. 

Every  bank  which  loans  money  on  stock  col- 
lateral has  a  ticker.  The  President,  Cashier,  or 
Loan  Clerk  are  supposed  to  bear  in  mind  the 
securities  they  have  and  watch  the  quotations 
closely.  If  danger  appears  imminent,  instant  ac- 
tion is  taken  to  protect  the  bank. 

The  system  of  doing  a  brokerage  business,  as 
illustrated  by  the  foregoing  figures,  makes  the 
speculating  customers  all  bulls,  and  their  deals  to 
remain  stationary,  while  all  the  stock  is  being 
bought  and  hypothecated  to  obtain  loans.  In 
point  of  fact  customers  are  buying  and  selling  and 
taking  profits  or  losses  all  the  time.     Both  stocks 

(nd  money  are  being  turned  over  .and  over  again 
nless  it  be  that  the  market  is  steadily  advancing 
nd  all  are  holding  on  for  big  profits. 
Then,  again,  almost  every  office  has  its  quota  of 
bears  who  put  up  10  per  cent,  margin  and  sell 
stock  they  don't  have  to  sell.  All  this  bear  mar- 
gin is  so  much  surplus  capital  in  the  hands  of  the 
banker-broker,  and  he  can  use  it  to  help  buy  stocks 
for  his  bull  customers. 

The  money  realized  from  the  sale  of  stock  the 
bear  did  not  have,  is  used  as  a  tender  to  borrow 
stock  to  keep  good  the  deliveries  on  short  sales 
until   the   bear   has   covered   his   shorts.     When 


1 86  STOCK 

stocks  loan  flat  the  market  value,  without  pre- 
mium, is  exchanged  for  the  loan  of  the  stock  from 
day  to  day.  If  stocks  loan  at  a  premium  and 
prices  have  gone  against  the  bear,  all  deficits  are 
of  course  drawn  from  his  margin. 

If  all  the  customers  of  an  office  are  bears,  the 
broker  can  do  an  enormous  business  without  a 
dollar  of  capital  of  his  own.  No  money  is  wanted 
to  buy  stock.  The  money  from  short  stock  sold 
is  used  to  borrow  for  delivery  or  to  buy  stock  to 
close  out  the  deal.  The  bear  margins  aggregate  a 
large  capital  in  the  hands  of  the  broker  for  his 
protection. 


SPECULA  TION.  1 8  7 

CHAPTER  XXIV. 

OFFICE    EXPENSES. 

THE  expense  of  running  a  well-appointed  brok- 
erage office  is  very  large.  Room  is  so  valuable 
in  the  vicinity  of  the  Stock  Exchange  that  the 
rent  is  often  made  so  much  a  square  foot.  A  well 
located  office,  twenty-five  feet  square,  will  rent  for 
$10,000,  which  is  $16  a  square  foot.  This  space  is 
divided  off  into  a  reception  room,  stock  room  for 
customers,  a  private  office,  and  bankers'  and 
brokers'  rooms. 

The  next  largest  expense  is  for  clerk  hire.  A 
managing  clerk,  say  $50  a  week.  An  under 
clerk,  $35  a  week.  Three  other  clerks,  $30  each 
per  week,  and  two  messengers  at  $10  a  week  each. 
Total,  $195  per  week.  Total  per  year  for  clerk 
hire,  $10,140. 

Some  offices  have  three  or  four  stock  indicators, 
one  oil  indicator  and  one  grain  and  provision 
ticker,  besides  news  tape  and  news  tissue  service. 
Deals  in  oil,  provisions  and  cotton  are  exceptional, 
however,  in  a  stock  office. 

The  expense  of  two  stock  tickers  is  about  $30  a 
month.  News  ticker  and  news  tissue  service  about 
•  15  a  month  each.     Total,  $720  a  year. 


I 88  STOCK 

Blank  books,  stationery,  postage,  printing  and 
advertising  is  a  heavy  item.  "  Railroad  Statistics," 
or  the  "  Financial  Review,"  given  away  perhaps  to 
hundreds  of  customers,  is  another  heavy  expense. 
The  Commercial  Agency  reports  of  R.  G.  Dun  & 
Co.,  and  Bradstreet,  and  the  Wall  Street  publica- 
tions kept  on  file,  with  telephone,  telegraph  and 
outside  messenger  fees,  altogether  would  aggregate 
about  $1,500. 

To  sum  up  :  rent,  $10,000  ;  clerk  hire,  $10,140  ; 
tickers  and  news  service,  $720 :  miscellaneous, 
$1,500,  would  in  round  numbers  make  a  grand 
total  expense  of  at  least  $22,000  per  year.  All  of 
which  must  go  in  the  annual  balance  sheet  before 
there  is  any  show  of  a  profit. 

Other  houses  doing  from  five  to  twenty  times 
as  much  business  have  expense  accounts  of  from 
$30,000  to  $50,000  and  even  more. 

Inferior  houses  get  along  on  $10,000  or  even 
$5,000  a  year  for  expenses.  Small  one-horse 
brokers,  dealing  in  ten  share  lots  and  upwards  at 
the  Consolidated  Exchange,  can  skin  along  for 
from  $500  to  $1,000  expenses  a  year,  in  confined 
quarters,  up  on  the  top  floor  of  five  and  six  story 
buildings. 

Notwithstanding  the  large  expenses  of  first-class 
houses,  some  brokerage  firms,  who  never  speculate 
a  dollar  themselves,  grow  immensely  rich  solely  out 
of  their  commission  profits. 


_    ,„ 

No  business  is  more  safe-and  profitable  than  com- 
mission brokerage,  if  it  is  conducted  on  a  non- 
speculative  basis.  Conservative  houses  make  sure 
of  safe  margins,  take  their  commissions  and  inter- 
est, and  leave  all  the  risks  to  their  customers. 

EXTENT  OF  THE  BUSINESS. 

In  a  very  active  market  the  business  done  in  a 
day  at  the  New  York  Stock  Exchange  is  often 
enormous.  During  the  boonT  of  1885  tne  sales 
for  many  days  at  a  time  ran  from  $00,000  to 
800,000  shares  per  diem. 

Houses  with  a  good  clientage  dealt  in  from  5,000 
to  1 50,000  shares  in  five  hours  of  business.  On 
10,000  shares  £  commission  is  $1,250;  on  50,000 
lares  it  is  $6,250  ;  on  100,000  shares  it  is  $12,500, 
tnd  on  150,000  shares  it  is  $18,750  net  commis- 
sions, if  full  rates  are  charged.  But  more  or  less 
of  the  purchases  and  sales  on  the  largest  transac- 
tions of  any  one  house  are  on  the  orders  of  other 
brokers,  at  $2  and  $4  on  each  100  shares,  which 
makes  a  wide  difference.  The  house  that  did 
150,000  shares  in  a  day,  perhaps  got  full  rates  on 
50,000  shares,  and  brokers'  commission  on  the 
balance. 

It  was  estimated  that  one  of  the  largest  opera- 
tors in  the  boom  of  1885  bought  not  less  than 
500,000  shares,  and  probably  a  great  deal  more  ; 
and  on  this  he  paid  full  rate  commissions  of  one- 
eighth  each  way  to  buy  and  sell,  making  the  com- 


19°  STOCK 

missions  on  the  turn  of  500,000  shares  $125,000, 
which  went  to  his  brokers.  He  could  afford  it, 
for  he  probably  cleared  not  less  than  $10,000,000 
on  his  deal  in  a  few  months. 

In  the  Fall  or  Winter,  after  the  recovery  from 
the  May  panic  of  1884,  one  large  operator  was 
known  to  have  sold  250,000  shares  of  the  stock  of 
a  single  railroad,  besides  having  large  holdings  of 
other  stocks.  He  picked  up  his  speculative  line 
around  panic  prices  and  made  large  profits.  As 
he  paid  full  rates  the  commissions  on  the  turn  in 
250,000  shares  of  a  single  stock  were  $62,500. 

When  transactions  are  very  large,  it  often  hap- 
pens that  perhaps  one-fourth  or  more  of  the  total 
sales  are  not  kept  account  of  from  day  to  day. 

In  the  testimony  before  the  Senate  Committee 
in  relation  to  a  tax  on  speculative  transactions, 
"  the  Secretary  of  the  Stock  Exchange  testified 
that  the  reported  transactions  in  1886  were  as 
follows  :  103,952,804  shares  of  listed  stocks; 
$13*367,100  of  Government  bonds;  $635,937,320 
of  State  and  railroad  bonds,  and  41,000,000  shares 
of  unlisted  stocks." 

Now  to  strike  an  average  between  the  very  high 
and  very  low  price  stocks,  suppose  we  lump  the 
entire  reported  sales  of  listed  and  unlisted  stocks 
at  $50  a  share,  the  entire  cash  value  would  be 
$7,247,640,200  in  stocks  alone,  exclusive  of  all 
other  securities.  If  full  rate  commissions  were 
exacted  on  the  whole  144,952,804  shares  of  listed 


SPECULA  TION .  191 

and  unlisted  stocks,  the  commissions  would  be 
$18,119,100.50  to  divide  up  among  the  1. 100  brok- 
ers of  the  Stock  Exchange,  which  would  give  each 
one  $16,471.90,  exclusive  of  commissions  on  all 
other  securities.  But  in  fact  this  is  not  so,  for 
many  brokers  buy  or  sell  for  themselves  free,  or 
execute  brokers'  orders  at  commissions  of  $2  and 
$4  on  each  100  shares.  Just  where  the  dividing 
line  is,  in  the  aggregate  transactions  between  out- 
siders at  full  commissions,  and  brokers  at  frac- 
tional rates,  it  would  be  hard  to  say. 

The  largest  transactions  of  any  one  day  ever 
known  at  the  New  York  Stock  Exchange,  were  on 
December  15,  1886.  Almost  everybody  was  long 
of  stocks.  Money  on  call  was  manipulated  up  to 
365  per  cent,  per  annum.  This  caused  a  great 
scare  among  margin  operators  who  had  to  pay 
interest.  They  threw  their  stocks  on  the  market 
in  wild  alarm.  The  sales  for  that  one  day  as 
reported  by  the  ticker  were  1,096,509  shares,  but 
it  was  estimated  that  the  total  transactions  were 
full  1 ,600,000  shares  at  the  Stock  Exchange,  and 
it  was  said  that  500,000  shares  more  changed 
hands  at  the  Consolidated  Exchange,  making  a 
grand  total  of  2,100,000  shares  in  one  day.  On 
these  full  rate  commissions  would  be  $262,500. 
If  we  were  to  estimate  that  day's  business  done 
in  all  the  bucket  shops  in  the  city  at  1,000,000 
shares,  and  add  it  to  that  done  at  the  two  Ex- 
changes,  the   total   would    be   3,100,000    shares. 


192  STOCK 

And    these    at    $50    a    share    would    represent 
$155,000,000  in  stock  deals  for  one  day. 

INTEREST  PROFITS. 

From  January,  1884,  up  to  the  first  few  months 
of  1886  money  was  so  plentiful  that  call  loans 
could  be  had  from  day  to  day  at  from  1  to  3  per 
cent,  per  annum.  Brokerage  houses  could  obtain 
all  the  money  they  wanted  on  stock  collateral  at 
about  2  per  cent.  All  customers  having  "  long  " 
stock  carried  for  them  were  charged  6  per  cent, 
legal  interest.  Some  brokers  obtained  their  loans 
on  time  at  3  to  4  per  cent,  per  annum  for  six 
months. 

It  is  immaterial  whether  a  customer  buys  100 
shares  of  stock  at  20,  costing  $2,000,  or  100  shares 
at  150,  costing  $15,000.  For  $1,000  margin  the 
banker-broker  will  buy  100  shares  of  either  of 
them.  A  decline  in  price  is  likely  to  be  as  great 
in  one  as  in  the  other. 

If  a  man  puts  up  $1,000  margin  and  buys  100 
shares  costing  $15,000,  he  must  pay  interest  on 
$14,000  as  long  as  the  stock  is  carried  for  him. 
Now,  if  the  banker  obtains  money  at  2  per  cent, 
and  charges  6  per  cent.,  he  makes  an  interest  profit 
of  4  per  cent,  at  the  expense  of  his  customer. 
This  interest  profit  pays  the  banker-broker  about 
$1.55  per  day,  $46.66  per  month,  $280  for  six 
months  and  $560  for  a  year,  if  carried  so  long, 
which  sometimes  happens. 


SPECULATION.  193 

f  a  high  priced  stock  is  carried  a  long  time  the 
ividends  the  customer  gets  is  an  offset  to  the 
interest  he  has  to  pay.  But  this  is  neither  here 
nor  there  between  him  and  the  banker,  who  gets 
money  at  one  rate  to  carry  the  stock,  and  charges, 
another  rate  for  a  big  profit. 

Suppose  the  banker-broker  carries  100,000 
shares  for  30  days  for  customers  on  margins  of 
$1,000  each,  and  the  average  cost  of  all  this  stock 
is  $60  per  share  — 100,000  shares  at  $60  is  "$6,000,- 
000.  With  interest  at  2  per  cent,  the  banker- 
broker  gets  the  money  for  30  days  for  $10,000 ;  he 
charges  the  customers  $30,000  and  pockets  $20,- 
000  for  interest  profits,  besides  $25,000  commis- 
sion profits  on  the  turn,  buying  and  selling  this 
100,000  shares. 

It  is  nothing  unusual  for  the  news  tissues  to 
report  that  one  house  "has  just  bought  30,000 
of  this,"  or  that  another  house  "has  sold  30,000 
shares  of  that  within  the  past  hour." 

In  times  of  activity  the  brokers  make  commis- 
sion money  rapidly  and  in  large  amounts.  In 
times  of  dullness  and  stagnation  many  do  not  see 
a  commission  for  days  at  a  time. 

A  few  houses  combine  stock  brokerage  with  the 
purchase  and  sale  of  commercial  paper.  Their 
profits  on  discounts  range  from  4-J  to  6J  per  cent, 
on  good   prime  notes,  running  from  two  to  four 

onths.       Some   houses   do    a  business  of  from 


H 


194  STOCK 

$5,000,000  to  $10,000,000  a  year  in  this  specialty 
alone,  and  their  profits  from  it  are  very  large. 

STOCK    HOUSE    SOPHISTRY. 

If  the  morality  of  stock  speculation  is  called  in 
question,  the  banker-broker  will  generally  reply, 
'"As  we  look  at  it,  stocks  are  a  commodity  and  to 
spread  them  among  investors  it  is  necessary  to 
have  dealings  in  them ;  otherwise  no  railroads 
could  be  built  or  improvements  made."  This  is 
all  well  enough  as  applied  to  investors,  but  the 
fact  is  that  often  the  entire  capital  stock  of  rail- 
roads are  bought  and  sold  over  and  over  from 
week  to  week  on  margins  for  mere  gambling  pro- 
fits, in  which  the  stocks  are  not  spread  among 
actual  investors  at  all. 

Sometimes  the  banker  is  a  convivial  fellow  and 
invites  the  boys  out  to  take  a  nip,  after  business, 
then  back  to  the  office,  with  whiskey  in  his  brain, 
the  banker  expounds  how  to  do  it,  "  Always  buy 
when  stocks  are  one  or  two  points  down  and  sell 
out  and  go  short  one  or  two  points  up,  then 
cover  your  shorts  and  go  long  again  one  or 
two  points  down,  that's  the  way  to  scoop 
the  profits."  All  of  which  should  be  taken 
cum  grano  salts.  The  banker  knows  this 
system  is  a  beautiful  one  to  rope  in  frequent 
commissions,  and  that  it  is  too  often  disas- 
trous in  scooping  the  whole  margins  of  the 
other  fellows. 


SPECULATION.  195 

WHO    GETS   THE   MONEY? 

The  qustion  is  sometimes  asked,  who  gets  away 
with  all  the  money  that  is  fed  into  the  Wall 
Street  mill  ?  Perhaps  the  following  exhibit  will 
show  where  many  millions  of  it  go  : 


Stock  Exchange  has  Members 1,100 

Produce     "  "  "         ..2,500 

Cotton      "  "  "  500 

Consolidated    Stock,    Oil    and    Mining 

Exchange 500 

Bankers  Associated  with  them,  say.  .  . .   1,000 

Total   5,6oo 


: 


o 


If   we   put    the   annual  private  and  family  ex- 
penses of  these  5,600  brokers  and   their  associates 
t  $2,500  (a  low  estimate)  each,  it  would   make  a 

tal  of  $14,000,000. 

Then  there  are  the  rents  of  the  banker-broker 
offices,  the  clerk  hire  and  all  the  other  expenses  to 
De  paid  before  there  is  anything  left  to  live  on  and 
to  accumulate  a  fortune  from.  The  number  of 
offices  and  average  expense  each  might  be  classi- 
fied as  follows  : 

Average  Expense.  Total. 

Stock  Offices,  say.  .300.  .  .$ro,ooo. .  . .  $3,000,000 
Produce       Offices, 

say 300...     2,500 750,000 

Stocks  and  Oil    ...  200.  .  .      2,000 400,000 


196  STOCK 

Cotton  Offices.    .  .  .  100.  .  .   $2,500 $250,000 

Total  private  living  expenses  brought 

down 14,000,000 


Grand  total $18,400,000 

This  $18,400,000  represents  annual  expenses, 
and  is,  of  course,  only  a  small  part  of  the  big  sums 
the  bankers  and  brokers  get  to  add  to  their  wealth 
of  hundreds  of  thousands  and  millions  of  dollars, 
leaving  the  money  taken  out  of  speculation  by 
interested  capitalists  who  are  not  bankers  and 
brokers  and  the  money  fed  into  the  bucket  shops 
out  of  the  case  altogether. 

There  are  probably  not  less  than  15,000  persons 
— bankers,  brokers,  clerks,  messengers,  etc. — who 
get  their  living  in  one  way  or  another  out  of  the 
transactions  at  all  these  Exchanges.  Where,  oh  ! 
where  does  all  the  money  come  from  ?  Does  it  not 
come  from  the  speculators  who  feed  their  money 
into  the  hopper  of  the  Wall  Street  mill  p 


SPECULATION.  197 


CHAPTER  XXV. 

THE    MARKET. 

IN  the  Spring  of  1886  the  outbreak  of  the  trans- 
continental troubles  and  the  great  strikes  on 
the  southwestern  railroads  caused  a  considerable 
decline  in  the  market,  which  enabled  capitalists  to 
pick  up  large  lines  of  stocks  at  low  figures  to  hold 
for  a  large  advance. 

In  the  Summer  and  Fall  the  crops  harvested 
were  generally  good.  The  railway  earnings  were 
large  and  increasing.  General  prospects  of  all  kinds 
of  business  and  trade  were  favorable.  The  out- 
look was  flattering  for  a  prolonged  bull  market 
which  would  put  speculative  values  higher  than 
they  have  been  for  years. 

The  professional  operators  were  all  loaded  up 
for  a  long  pull,  and  the  speculative  public  were 
coming  in  as  buyers  in  large  numbers.  About  the 
middle  of  November  the  pork-packers'  strike  in 
Chicago  caused  quite  a  slump  in  the  prices  of 
Western  stocks.  The  strike  collapsed  in  a  week 
or  ten  days ;  then  there  was  a  recovery  and  a 
strong  market. 

In  November  there  was  a  wild  speculation  in 
Consolidated  California  and  Virginia  mining  stock, 
which  advanced  from  $2.50  to  $50  a  share. 


I98  STOCK 

During  the  Summer  and  early  Fall  the  rates  of 
foreign  exchange  favored  an  influx  of  gold  from 
Europe.  This  helped  speculation  and  made  the 
market  buoyant. 

In  the  latter  part  of  November  the  money 
market  was  working  towards  stringency.  The 
surplus  bank  reserve,  .which  a  year  before  was 
about  $65,000,000  above  the  legal  limit,  became 
reduced  to  less  than  $8,000,000  in  December. 
Rates  on  call  loans  were  advanced  on  some  days 
to  far  above  the  legal  interest.  Gold  ceased  to 
flow  this  way,  and  the  high  rates  on  bills  of  ex- 
change tended  towards  large  exports  of  bullion 
back  to  Europe.  These  things  operated  to  check 
speculation  on  the  bull  side. 

With  affairs  in  this  shape,  it  is  supposed  that 
some  of  the  largest  operators  sold  out  large 
amounts  of  stock  to  take  profits,  with  a  view  of 
buying  back  their  stocks  at  much  lower  prices. 
At  all  events,  stocks  became  largely  distributed 
in  the  hands  of  small  holders.  Big  bears  sold  the 
market  short,  and  for  days  previous  to  the  middle 
of  December  prices  were  tending  downward. 

High  interest  rates  for  money  is  calculated  to 
make  margin  speculators  carry  as  few  stocks  as 
possible,  txcept  when  there  is  a  movement  favor- 
able to  them.  The  banker-brokers  charge  legal 
interest,  and  in  addition  can  charge  their  customers 
any  higher  rate  they  have  to  pay  for  money  to 
carry   stocks.      Hence,    with    call    loans    ranging 


SPECULATION.  199 

itween  6  and  40  per  cent.,  the  bull  customers 
having  stocks  carried  for  them  on  margins  were 
on  the  anxious  seat. 

The  climax  was  reached  on  the  afternoon  of 
December  14th,  near  the  close  of  business,  when 
the  rate  on  call  loans  was  manipulated  up  to  one 
per  cent,  per  day.  What  happened  on  the  open- 
ing of  business  the  next  day  is  told  by  the  Morn- 
ing Journal  of  December  16th,  thus  : 

THE    RUSH   TO    SELL. 

The  wildest  scenes  in  Wall  Street  since  the  ter- 
rible May  panic  of  1884,  which  carried  down  a 
dozen  strong  houses,  were  witnessed  yesterday. 

The  greatest  day's  business  in  the  history  of 
the  New  York  Stock  Exchange  was  transacted. 
The  sales  of  1,096,509  shares  of  stock  were  report- 
ed by  the  ticker,  but  a  fair  share  of  the  dealings 
were  not  recorded  at  all.  It  is  estimated  that  the 
transactions  foot  up  1,600,000  shares. 

The  excitement  was  too  mad  for  the  trading  to 
e  kept  track  of.  All  the  quotation  reporters 
could  do  was  to  gather  as  many  sales  as  they  could 
and  let  the  rest  go  entirely. 

When  the  doors  of  the  Stock  Exchange  were 
flung  open  in  the  morning  and  the  gong  was 
sounded  to  begin  business,  the  tumble  in  prices 
began.  The  pressure  to  sell  was  tremendous. 
There  was  no  buyers.  Orders  came  in  by  tele- 
raph  from  London,    Chicago,  St.   Louis,   Balti- 


200  STOCK 

more,  Philadelphia,  Washington,  Boston  and  all 
throughout  the  country  to  sell. 

A  panic  seemed  to  have  seized  upon  specula- 
tors the  whole  length  and  breadth  of  the  land. 
Pandemonium  reigned  on  the  floor  of  the  Ex- 
change. The  great  room  was  packed  with  brok- 
ers. Insanity  in  its  most  violent  form  seemed 
to  have  attacked  the  mass  of  men. 

The  brokers  struggled  and  yelled  and  shook 
their  order  pads  in  making  their  bids  and  offers. 
The  galleries  were  packed  with  spectators  who 
came  to  see  the  wonderful  sight.  No  one  who 
viewed  the  frenzied  crowd  below  could  understand 
how  any  one  made  himself  heard,  much  less  un- 
derstood. 

Hats  fell  off  the  brokers'  heads  and  were  tramp- 
led under  foot.  There  was  no  time  to  pick  them 
up.  Neckties  came  undone.  The  buttons  were 
torn  from  cuffs.  Button-holes  in  coats  were  rip- 
ped out.  The  brokers  were  pushed  and  crushed, 
but  words  could  not  be  wasted  in  expostulation. 
Talk  was  too  valuable  for  that.  It  was  all  needed 
to  avert  losses  or  secure  profits. 

One  after  another  the  prices  dropped,  and  the 
lower  they  went  the  greater  was  the  excitement. 
It  looked  as  if  the  bottom  could  not  be  found  for 
values.  Wall  Street  seemed  plunging  into  ruin. 
A  day  was  feared  worse  than  Black  Friday  of 
1873,  when  men  who  came  down  town  in  the 
morning  millionnaires  went  home  at  night  paupers. 


In  the  st 


SPECULA  TION.  ^S 


In  the  streets  surrounding  the  Stock  Exchange 
the  same  wildness  reigned  as  on  the  floor.  Men 
clad  in  the  height  of  fashion  and  wearing  the 
glossiest  silk  hats  dashed  back  and  forth  in  the 
pouring  rain  until  they  were  as  bedraggled  as  the 
sodden  vagrants  who  are  encountered  at  every 
turn  in  the  financial  mart  begging  for  nickels  and 
dimes  to  buy  whisky.  Their  fortunes  depended 
on  their  efforts.  Money  was  wanted  by  hundreds 
of  men  to  ward  of  disaster.  They  hurried  from 
bank  to  bank  and  from  money-lender  to  money- 
lender. They  begged  for  it  and  offered  the  most 
extravagant  prices  for  it.     The  lenders  were  filled 

■ith   alarm  and  clutched  their    money-bags   the 
ghter.     They  asked    the  most   perfect  security 
before  they  would  make  any  loans. 

I  On  the  floor  the  price  for  money  was  run  up  to 
per  cent.  "  over  night,"  or  for  a  single  day. 
hat  was  at  the  rate  of  365  per  cent,  a  year. 
Baron  L.  Von  Hoffman,  the  banker,  sent  into 
he  Board  the  offer  of  half  a  million  at  the  regular 
te  of  6  per  cent,  a  year.  The  brokers  grabbed 
r  the  money  and  thousands  after  thousands  were 
ken.  The  action  of  Baron  Von  Hoffman  ended 
e  tremendous  charges  of  the  greedy  money- 
enders  and  marked  a  turn  in  the  tide. 

It  allayed  fear  and  the  excitement  subsided. 
With  the  departure  of  the  wildness  prices  began 
to  improve.  The  day  of  terror  went  out  with  prices 
ascending.    A  great  deal  of  apprehension  remain- 


202  STOCK 

ed,  and  many  a  man  who  was  rich  the  day  be- 
fore was  left  to  the  reflection  that  another  day  of 
descending  values  would  make  him  penniless. 
Lights  were  burning  brightly  in  hundreds  of  offices 
in  Wall  Street,  and  clerks  were  struggling  with 
great  masses  of  figures  when  the  Journal  went  to 
press  this  morning. 

The  Windsor  Hotel  was  packed  with  brokers 
and  operators  and  people  who  came  out  of  curios- 
ity last  night.  It  is  the  financial  rendezvous  in 
the  evening,  and  the  talk  was  of  nothing  but  the 
events  of  yesterday  and  the  probabilities  for  to- 
day. 

The  decline  on  this  day  was  from  \  to  c/J-  per 
cent,  right  through  the  list,  and  the  total  decline 
on  this  and  previous  days  was  from  10  to  15  per 
cent. 

One  of  the  truly  good  and  pious  men  of  the 
market,  after  it  was  over,  said  : 

"  The  situation  is  cleared  up  by  the  break.  It 
was  expected,  and  the  principal  operators  sold  out 
their  stocks  several  days  ago." 

A  prominent  room-trader  said  : 

"I  am  a  bull  now.  The  break  was  what  the 
market  needed  and  did  it  a  heap  of  good.  You 
can  tell  your  friends  they  can  buy  almost  any- 
thing and  make  money.  Wall  Street  can  be  bank- 
ed in  when  it  will  go  through  an  experience  like 
to-day's  in  the  shape  it  did." 

The  "  principal  operators  "  took  their  profits  and 


SPECULA  TION.  203 

stood  out  from  under  in  time,  of  course.  They 
always  do.  But  what  "  a  heap  of  good"  the  break 
did  the  thousands  of  lambs  who  were  wiped  out, 
it  would  be  hard  to  tell. 

THE    AFTER    GOSSIP. 

One  prominent  bear  was  said  to  have  cleared 
$350,000  out  of  the  break. 

A  lady  who  risked  her  principal  in  a  certain 
stock  had  $48,000  profits  in  sight  a  few  days  be- 
fore. The  panic  wiped  her  out  clean,  principal 
and  profits. 

A  gentleman  had  $18,000  in  sight  on  $3,000  of 
margin.  He  waited  too  long  and  his  profits  and 
margin  disappeared  in  the  whirlpool. 

The  club  men  suffered  severely.  A  gentleman 
stated  that  of  over  100  men  he  knew  personally, 
to  meet  at  Delmonico's  or  on  Wall  Street  in  the 
day  time,  not  one  of  them  knew  where  they  were 
going  to  get  a  hundred  dollars  for  the  holidays. 

One  Club,  whose  members  were  connossieurs  in 
rare  wines  and  liquors,  were  compelled  to  resort 
to  cheaper  wines  or  do  without.  A  story  was  told 
of  a  row  between  a  member  and  the  steward  of 
the  Club.  It  seems  that  the  steward,  at  the  sug- 
gestion of  the  member,  entrusted  him  some  time 
before  with  the  savings  of  a  lifetime  for  an  invest- 
ment that  was  to  bring  in  a  fortune.  Result,  the 
money  vanished  in  the  vortex  of  the  maelstrom, 
leaving  the  steward  stranded. 


204  STOCK 

The  panic  caught  up  about  all  the  small  specu- 
lators, men  who  margined  up  on  from  iooto  2,500 
shares.  It  gobbled  them  up  bodily  without  leaving 
them  enough  to  buy  a  midday  lunch. 

One  old  Wall  Street  habitue,  who  had  seen  all 
the  panics  since  1873,  said  :  "  This  one  did  more 
harm  than  any  of  the  others.  Its  victims  may  be 
counted  by  the  thousand,  as  in  the  whole  list  of 
his  speculative  acquaintances,  he  had  only  met 
one  man  that  was  not  wiped  out,  and  lost  all  the 
profits  and  capital  he  had  been  nursing  for  months. 
The  one  lucky  man  had  closed  out  his  accounts 
the  week  before  to  go  abroad." 

THE  AFTER  MARKET. 

The  large  inside  operators  improved  their  op- 
portunity to  pick  up  and  recover  another  large  line 
of  stocks  around  the  bottom  prices  of  the  panic. 
Values  improved  again  and  the  talk  and  rumors 
were  all  in  favor  of  a  big  bull  market  to  come. 

Then  the  Inter-State  Commerce  bill  in  Congress; 
the  Pacific  Railroad  Seventy  Year  Extension  Fund- 
ing bill,  and  the  Russian,  Turkey- Franco-German 
war  cloud,  with  the  subsequent  great  labor  strikes 
among  the  coal-handlers  and  'longshoremen  came4 
up  as  disturbing  elements,  causing  a  halting  and 
irregular  market. 

At  every  session  of  Congress,  expected  action, 
affecting  railroads,  land  grants  and  United  States 
mail    subsidies,    is    brought    in    as   a    bug-a-boo 


SPECULA  TJON.  205 

to  affect  the  stock  market  favorable  to  the  de- 
sires of  the  men  who  run  it.  Every  little  thing 
occurring  on  the  financial-political  horizon  is  taken 
advantage  of  to  hoodwink  outside  speculators. 
If  the  sources  of  the  trickery  and  rumors  origin- 
ated, to  lead  and  mislead  the  public,  were  traced 
to  the  fountain  head  and  exposed,  the  result 
would  be  astounding,  that  such  men  could  occupy 
the  social  positions  they  do.  It  would  make  even 
a  horse  laugh. 

The  sympathy  which  exists  between  the  specu- 
lative markets  of  America  and  Europe  is  easily 
explained.  The  English,  the  French,  the  Dutch 
and  the  Germans  are  great  speculative  commer- 
cial gamblers.  They  deal  enormously  in  Ameri- 
can securities,  because  the  interest  and  dividends 
on  good  bonds  and  stocks  are  larger,  and  the  mark- 
et fluctuations  wider  than  on  their  securities  at 
home.  Hence,  any  political  or  warlike  complica- 
tion which  causes  them  to  throw  over  their  own 
and  American  stocks  reacts  on  our  own  Exchanges, 
as  well  as  on  the  Bourses  of  London,  Paris,  Frank- 
fort, Vienna  and  Berlin. 

It  is  well  known  to  political  observers  that 
France  is  biding  her  time,  and  itching,  to  wipe 
out  the  disaster  of  Sedan,  by  the  recovery  of  the 
Provinces  of  Alsace-Lorraine.  The  first  effect  of 
a  European  war  scare  is  to  cause  holders  to  turn 
their  foreign  securities  into  money  and  await 
events. 


/ 


2o6  STOCK 

With  things  in  this  shape,  our  market  in  Janu- 
ary, 1887,  was  adversely  affected  by  the  large  sales 
of  American  stocks  in  London  for  English  and 
Continental  account.  This,  with  the  alternate 
war  and  peace  rumors,  made  the  market  very 
irregular  in  New  York. 

A  large  amount  of  American  stocks  are  listed 
at  the  London  Exchange,  and  that  is  the  Euro- 
pean market  for  our  securities.  It  should  alsoi>e 
borne  in  mind  that  the  difference  between  New 
York  and  London  time  is  five  hours.  With  busi- 
ness hours  the  same,  from  10  A.  M.  to  3  P.  M., 
the  latter  Exchange  is  just  closing  as  the  former 
is  opening. 

On  January  24th  there  was  a  war  panic  in  Lon- 
don, caused  by  alleged  advices  and  selling  orders 
from  Paris  and  Berlin.  This  made  the  former 
place  the  financial  centre  of  the  war  fever.  The 
heavy  selling  of  Americans  there  brought  a  serious 
decline  in  prices,  and  so  intimidated  London  hold- 
ers of  our  securities  that  they  in  turn  sold  heavily 
in  New  York  on  the  same  day. 

Private  cable  advices  had  been  received  in  New 
York,  and  at  the  commencement  of  business  the 
first  quotations  opened  off  from  i-J-  to  2  per  cent, 
below  the  previous  day's  closing,  right  through 
the  list,  and  a  further  decline  in  some  instances  of 
1  per  cent,  followed. 

The  panic  arose  from  rumors  that  France  was 
moving    troops    towards    the    frontier,    and    was 


SPECULA  TION.  207 

buying  horses  abroad  for  the  use  of  the  army.  A 
denial  of  these  rumors  by  Gen.  Boulanger,  the 
French  Minister  of  War,  caused  a  sudden  revul- 
sion from  selling  to  buying  stocks  back  again. 

At  the  opening  of  business  the  next  day,  at 
both  London  and  New  York,  prices  were  jumped 
up  2  per  cent,  at  first  quotations.  The  decline  of 
the  previous  day  was  recovered  almost  at  a  bound. 
The  panic  was  nothing  but  a  financial  somersault 
for  stock-jobbing  purposes.  And  as  the  unex- 
pected always  happens  to  those  who  least  expect 
it,  the  bears  on  both  sides  of  the  big  pond  had  a 
lively  time  climbing  to  cover  their  shorts  put  out 
on  the  strength  of  the  war  rumors. 

The  passage  of  the  Inter-State  Commerce  bill 
had  been  discounted.  The  subsidence  of  the  war 
scare  sent  stocks  booming  upward  again.  The 
fizzling  out  of  the  labor  strikes  also  helped  for  a 
time  to  make  the  market  strong  and  buoyant. 
But  there  soon  came  another  halt. 

By  reason  of  adverse  legislative  action,  inimical 
to  the  wishes  of  the  Chancellor,  Prince  Bismarck 
had  previously  dissolved  the  German  Parliament. 
The  German  elections  for  new  members  was  made 
a  factor  in  speculation,  both  here  and  in  Europe, 
as  having  a  bearing  on  the  question  of  peace  or 
war. 

Something  always  comes  up  that  enables  the 
leaders  of  the  market  in  New  York,  and  their  allies 
in  Europe  to  act  on   advance  information,  and  to 


208  STOCK 

trade  in  their  stocks  for  profitable  turns.  The 
profits,  of  course,  have  to  come  out  of  the  pockets 
of  the  crowd,  whose  only  recourse  is  to  "  wait  till 
the  clouds  roll  by." 

The  elections  resulted  in  a  victory  and  vindica- 
tion for  the  master  mind  of  Europe,  probably 
assuring  peace  for  awhile  at  least,  and  was  con- 
strued as  favorable  to  the  interests  of  speculative 
finance.  Stocks  were  boomed  up  2  or  3  per  cent, 
on  the  strength  of  it,  giving  the  knowing  ones 
another  opportunity  for  profitable  trading.  Then 
the  market  was  made  to  slump  down  again  to 
enable  them  to  get  back  their  stock. 

Now;  March  1st,  '87,  all  hands  are  waiting  for  the 
expiration  of  the  49th  Congress.  Then  all  fears 
of  legislation  unfavorably  affecting  railways  and 
stock  speculation  will  be  at  an  end  for  a  long  time 
to  come.  And  then,  too,  if  the  wise  men  of  Wall 
Street  are  to  be  believed,  the  biggest  bull  market 
ever  seen  is  to  be  gradually  worked  up. 

The  rapid  recovery  of  the  country  from  its 
long  period  of  depression  has  naturally  led  to 
the  conclusion  that  a  long  season  of  inflation 
must  follow.  If  the  financial  doctors  are  right, 
and  a  big  boom  does  come,  it  will  be  interrupted 
by  many  a  slump,  engineered  by  the  "  big  men" 
to  realize  profits  and  recover  their  stocks  for  suc- 
ceeding bulges  and  reactions. 

The  average  speculator  will   do  well  to  let  the 


SPECULA  TION.  209 

ar  side  alone.  He  will  do  still  better  to  make 
his  margins  30  per  cent,  strong.  And  he  will  do 
superlatively  better  still  to  run  at  the  least  sign  of 
danger  when  he  has  a  profit  in  sight. 

As  it  was  in  the  time  preceding  the  big  bull 
market  of  188 1-2,  when  reams  upon  reams  of 
stock,  much  of  it  not  worth  the  paper  it  was 
written  on,  was  floated  and  eagerly  grabbed  up, 
just  so  it  is  now.  A  vast  amount  of  worthless 
stock  is  being  put  out  in  Wall  Street.  In  a  boom 
almost  anything,  having  an  appearance  of  value, 
will  sell.  Good  stocks  on  the  advance  will  drag 
poor  stocks  up  with  them,  and  vice  versa  in  a 
declining  movement  the  worthless  stuff  helps  to 
drag  good  stocks,  having  real  merit,  down  in 
value. 

(It  is  to  the  interest  of  the  insiders  to  boom 
1  everything,  good,  doubtful,  and  worthless, 
hen  the  bubble  can  be  inflated  no  farther, 
ey  are  cunning  enough  to  slowly  feed  out  all 
they  have  to  sell  and  to  pocket  their  money. 
Then  the  final  culmination  of  the  great  bull 
market  will  be  the  old,  old  story  of  1883  anc* 
1884,  when  tens  of  thousands  of  the  outside  pub- 
lic, who  had  been  enticed  in  by  illusions,  were  left 
stranded.  Then,  too,  all  those  who  rely  on  the 
superior  wisdom  of  their  whilom  banker  and  brok- 
er friends,  to  "  hold  on,  the  market  will  turn  up 
again  and  you  will  come  out  all  right,"  will  be  all 


5 


210  STOCK 

the  worse  roasted  the  longer  they  "  hold  on,"  by 
the  ruthless  raids  of  the  bears  to  destroy  the  value 
of  their  property.  And  some  of  these  bears  may 
be  the  very  same  fellows  who  enticed  in  and 
pocketed  bull  profits  out  of  these  very  innocents. 


SPECULA  TION. 


■ 


CHAPTER  XXVI. 

THE   ROAD   TO    SUCCESS. 


THE  ability  to  command  unlimited  money  and 
to  form  pools  and  combinations  of  hundreds 
of  millions  of  dollars  is  what  makes  the  Wall 
Street  kings  so  irresistible.  They  can  make  the 
market  what  they  will.  Against  them  the  general 
public,  as  speculators,  have  not  the  ghost  of  a 
chance.  Here  and  there  a  few  friends  of  this  or 
that  manipulator  of  stocks  may  be  let  into  the 
confidence  of  the  inner  circle  and  be  allowed  to 
operate  with  more  or  less  sure  results. 

The  public  in  general  are  the  victims,  the  prey 
nd  the  meat,  so  to  speak,  of  the  money  farmers 
f  Wall  Street.  To  get  the  public  to  come  in  as 
buyers  is  necessary  to  the  successful  ending  of 
their  schemes.  These  schemes  always  culminate 
in  the  victims  being  left  in  a  fix  from  which  there 
is  no  escape  without  more  or  less  serious  losses,  if 
not  absolute  ruin. 

Hence  those  who  have  only  enough  of  this 
world's  goods  to  support  themselves  and  families 
in  comfort,  with  no  surplus  to  risk  in  a  game  of 
chance,  have  no  business  in  Wall  Street.  Their 
only  safe  road  to  wealth  is  to  scratch  from  morn- 


212  STOCK 

ing  to  night  at  some  honest  employment  and  save 
every  penny. 

To  the  person  who  wishes  to  invest  for  income 
only  there  are  certain  classes  of  stocks  which  are 
almost  as  safe  as  a  mortgage.  These  are  the  stocks 
of  roads  leased  to  other  prosperous  corporations, 
which  guarantee  interest  on  their  bonds  and  divi- 
dends on  their  stocks. 

The  Rensselaer  and  Saratoga  Railroad,  for  in- 
stance, is  leased  to  the  Delaware  and  Hudson 
Canal  Company,  which  guarantees  interest  on 
bonds,  and  8  per  cent,  dividends  on  the  stock.  The 
Delaware  and  Hudson  Canal  Company  must  pay 
these  charges  before  it  can  pay  anything  on  its 
own  bonds  and  stocks.  Good  stocks  like  this, 
which  are  guaranteed,  are  seldom  in  the  market 
for  sale  ;  their  quotations  are  very  high  and  they 
are  not  subject  to  speculative  fluctuations  like 
other  stocks,  because  they  are  so  closely  held  by 
investors,  for  the  income  they  bring.  Some  of 
the  strongest  railway  corporations  have  leased 
lines  on  which  interest  and  dividends  are  guaran- 
teed, but  their  price  is  so  high  it  brings  the  income 
on  their  cost  down  to  4  or  5  per  cent,  on  those 
paying  8  or  9  per  cent,  dividends.  This,  however, 
is  offset  by  the  stock  being  exempt  from  taxes. 
They  are  seldom  reported  in  the  market  except 
on  a  "wash"  to  get  a  price  quoted. 

The  outsider  should  never  sell  stocks  short. 
Only  professional  operators,  who  thoroughly  un- 


SPECULATION.  213 

derstand  all  the  tricks  of  stock  dealings,  can  hope  to 
succeed  on  the  short  side.  Professional  bears  are 
themselves  often  caught  in  corners  and  lose  more 
ammunition  than  they  could  have  hoped  to  make. 

To  be  safe  a  man  should  never  speculate  on  a 
margin.  Fifty  per  cent,  is  called  a  strong  margin, 
but  even  that  is  frequently  wiped  out  if  the  stock 
has  been  bought  high  up  and  is  held  too  long  in  a 
falling  market.  On  a  weak  margin  a  man  may 
lose  it  at  the  first  venture.  Or  he  may  take  mini- 
mum profits  and  losses  for  a  long  time,  but  sooner 
or  later  he  will  get  caught  by  the  unexpected  that 
will  swallow  all  he  has,  if  it  does  not  leave  him  in 
debt  to  his  brokers. 

No  prudent  man  or  woman  should  speculate  for 
catchpenny  profits  of  one,  two  or  three  hundred 
dollars  on  each  100  shares.  Small  successes  only 
lead  on  to  heavy  set-backs  that  eat  up  all  profits 
and  often  a  big  hole  in  the  margin. 

The  worst  thing  prudent  or  imprudent  people 
can  do  is  to  hang  around  the  banker-broker  offices. 
They  are  subject  to  the  manifold  influences  which 

I  there  prevail  to  warp  and  pervert  common-sense, 
discretion  and  good  judgment,  and  which  too 
often  lead  them  into  traps  and  pitfalls. 

The  banker-brokers  are  there  to  make  money. 
No  one  should  be  deceived  by  their  oily  gammon, 
for  under  it  all  they  are  ravenous  for  commissions. 
Of  course  they  would  be  only  too  glad  to  have 
their  customers  make  money  every  time.      But 


214  STOCK 

they  know  things  don't  work  that  way,  and  so,  if 
they  can  make  money  for  themselves,  it  is  all  one 
to  them  whether  their  clients  can  or  not.  The 
tape  speculator  soon  becomes  a  confirmed  gambler, 
and  as  hardened  and  heartless  as  the  blood-suck- 
ers who  feed  upon  him. 

People  should  never  buy  stocks,  either  for  specu- 
lation or  investment,  after  the  price  has  been 
boomed  up  20,  30,  or  40  per  cent,  above  the 
bottom  of  a  previous  decline.  That  is  the  very 
time  when  those  who  have  inflated  prices  are  sing- 
ing their  sweetest  and  most  alluring  notes  to  in- 
duce people  to  come  as  buyers.  They  are  ready 
to  sell  out  through  various  brokers  so  that  their 
operations  cannot  be  traced. 

The  good  years  and  the  bad  years  follow  period- 
ically in  the  stock  market  like  the  seven  years  of 
plenty  and  the  seven  years  of  famine  in  Egypt. 
Usually  there  are  two,  three  or  four  prosperous 
years  with  crops  and  business  all  good,  then  there 
comes  bad  years  of  poor  crops,  poor  business  and 
depression.  All  these  things  should  be  remem- 
bered and  calculated  on  by  those  who  meddle 
with  the  stock  market. 

To  sum  up,  the  outsider  should 

1.  Never  short  the  market. 

2.  Never  buy  on  top  of  the  booms. 

3.  Never  buy  on  a  margin. 

4.  Keep  away  from  stock  office  influences  and 
street  gossip. 


SPECULA  TION.  2 1 5 

5.  Operate  only  as  an  investor  for  dividend  in- 
come. 

6.  Only  buy  low  after  severe  declines. 

By  following  these  rules  and  buying  good  stocks, 
any  man  who  has  surplus  money  and  has  patience 
to  wait  months  or  a  year  or  two  for  results  can 
make  an  enormous  interest  on  his  investment  over 
and  above  the  dividend  income  he  will  receive 
quarterly  or  semi-annually. 

The  family  man  should  invest  his  money  to 
secure  a  sure  and  certain  support  for  his  family. 
He  should  use  only  surplus  money  he  can  spare 
in  stock  operations.  Stocks  which  are  considered 
good  sound  income  payers  one  year,  may  the 
text  year  pass  their  dividends,  and  suffer  a  heavy 
decline  in  price  through  deceptive  book-keeping 
or  by  being  too  closely  paralleled  by  a  new  road 
fighting  for  business.  In  such  a  contingency  a 
man  should  be  prepared  to  wait  years  for  the  pay- 
ment of  dividends  to  be  resumed,  and  for  the 
price  of  the  stock  to  advance  to  at  least  the  price 
it  cost  him.  Everything  comes  to  him  who 
waits,  in  the  stock  market,  unless — unless  it  is 
worthless  past  redemption. 

People  should  keep  away  from  Wall  Street  and 
watch  the  market  from  a  distance,  through  the 
newspaper  reports,  for  great  depressions  and  de- 
clines in  prices.  Then,  with  values  from  30  to  50 
per  cent,  off  from  the  top  of  a  previous  boom, 
will  be  the  time  to  look  all  around  the  business 


216  STOCK 

horizon.  If  crops  are  growing,  are  they  likely  to 
be  good?  If  crops  have  been  harvested,  have  we 
a  large  surplus  for  export  ?  Is  there  a  large 
shortage  of  European  crops  of  which  we  have  a 
surplus  ?  Are  we  exporting  or  importing  gold  ? 
Are  the  railway  earnings  large  and  increasing,  and 
are  the  roads  at  peace  or  at  war  ? 

Having  cast  a  mental  horoscope  of  the  near 
future,  and  if  satisfied  that  the  most  of  these 
things  are  favorable  to  an  improvement  in  busi- 
ness interests,  a  man  can  come  in  and  buy  good 
stocks  with  confidence. 

He  should  buy  dividend  payers.  If  he  buys 
several  hundred  or  thousand  shares,  he  should 
make  good  selections  of  stocks  of  several  different 
Companies.  Then  he  will  not  have  all  his  eggs 
in  one  basket.  If  one  stock  does  not  do  well,  he 
may  achieve  good  results  on  the  others.  He 
should  buy  only  what  he  can  pay  for.  Then  he 
should  take  his  stocks  away,  and  have  them 
recorded  in  his  name  in  the  offices  of  the  different 
Railway  Companies.  Having  done  this,  he  should 
lock  them  up  in  his  strong  box,  or  place  them  in 
the  vaults  of  a  Safe  Deposit  Company.  Then  he 
should  go  away  and  keep  away  from  Wall  Street, 
and  watch  and  wait  patiently  for  months  or  a  year 
or  more  for  the  good  time  coming.  It  will  come 
sooner  or  later. 

The  man  who  has  bought  his  stocks  compara- 
tively low,  and  has  paid  for  them,  can  afford  to 


: 


SPECULA  TION.  2 1 7 

e  the  price  go,  temporarily,  10  or  20  per  cent, 
under  the  price  he  paid.  He  should  never  be 
frightened  into  throwing  over  his  stocks.  It  is  a 
common  trick  to  work  on  people's  fears,  and 
freeze  them  out,  so  that  other  men  can  get  the 
tocks  at  a  low  price  to  hold  for  a  big  advance. 

The  position  of  a  man  who  has  paid  for  what  he 
olds  is  impregnable.  The  bears  may  do  their 
worst ;  but  they  cannot  hurt  him,  if  he  will  only 
keep  cool,  and  laugh  at  their  fictions. 

The  good  time  coming  will  come  at  last.  It 
may  be  within  three  months  or  it  may  take  one  or 
two  years.  Aided  by  natural  causes,  stocks  will 
go  booming  or  will  be  put  up  by  main  force  by 
artificial  manipulation  20,  30  or  40  per  cent. 
Then  is  the  time  for  the  holder  of  stocks  to  come 
down  into  Wall  Street  and  dump  them  on  the 
market.  The  outsider  should  be  sure  to  sell  out 
and  take  his  profits  before  the  big  insiders  can  sell 
out  theirs  and  go  short  for  a  decline. 

Having  sold  out,  a  man  should  gather  up  his 
principal  and  profits  and  run  away.  He  should 
not  wait  a  minute  for  his  banker  to  talk  him  into 
another  venture.  Get  away  from  Wall  Street  and 
keep  away  from  its  influences  until  another  great 
periodical  decline  comes  around.  Then  go  into 
the  market  and  invest  again  as  near  bottom  prices 
as  can  be  guessed  at,  and  record  and  put  away  the 
stocks  and  leave  the  Street  until  another  big  bull 
market  sends  prices  kiting  again. 


218  STOCK 

This  process,  if  repeated  in  all  the  big  declines 
and  advances,  will,  in  the  course  of  ten  or  twenty 
years,  result  in  a  big  fortune  from  small  beginnings. 

A  man  can  always  prophesy  after  an  event. 
Here  was  what  could  have  been  done.  In  Janu- 
ary, 1885,  Delaware,  Lackawanna  and  Western 
could  have  been  bought  around  83.  The  equiva- 
lent of  100  shares  at  83  is  $8,300.  In  December 
following  the  price  was  $135  a  full  share.  100 
shares  at  135  is  $13,500.  This,  if  bought  and  sold 
at  the  right  times,  would  have  yielded  a  profit  of 
about  $5,200.  In  addition,  during  that  time  three 
dividends  were  paid  on  it,  two  of  2  per  cent,  and 
one  of  if  per  cent.,  making  $575  in  dividends, 
which,  added  to  the  profit,  made  a  total  net  gain 
°f  $5>75°  after  paying  commissions,  all  made 
within  one  year. 

In  the  same  year  Lake  Shore  was  below  51  in 
the  Spring  or  Summer.  The  next  fall  it  was  in  the 
nineties,  and  once  crossed  par  in  1886,  a  gain 
of  over  $4,000  on  100  shares.  Union  Pacific  in 
1884  advanced  from  28  to  58  in  three  months,  a 
gain  of  $3,000  in  the  value  of  100  shares. 

It  is  always  .more  safe  to  buy  the  dividend  pay- 
ers. But  sometimes  a  judicious  selection  from 
among  the  Fancies  will  pay  a  tremendous  pro- 
fit. O.  T.  in  1884  was  down  to  $625  for  100 
shares.  In  less  than  two  years  it  was,  at  one 
time,  worth  $3,800,  a  difference  of  $3,175. 

Then  there  was  Ohio  Central,  the  poorest  stuff 


pe 


SPECULATION.  219 

the  whole  list,  down  to  \2\  cents  a  share   in 

85,  100  shares  for  $12.50.  It  boomed  in  less 
han  a  year  to  $200  for  100  shares,  a  gain  of  1,500 

r  cent. 

The  cheap  stocks  are  very  risky  to  meddle  with 
for  investment.  By  bad  management  and  inher- 
ent rottenness,  they  may  be  forced  into  the  hands 
of  receivers,  or  sold  under  foreclosure  for  defaults 
of  interest  or  principal  on  bonds.  If  the  sale  does 
not  cover  the  bonded  indebtedness,  the  stock  is 
wiped  out  and  annihilated. 

Great  discretion  must  be  exercised  in  the  selec- 
tion of  investment  stocks.  A  few  years  ago  the 
Louisville  and  Nashville,  the  Central  Pacific  and 
the  Union  Pacific  were  all  6  and  7  per  cent,  divi- 
dend payers,  and  sought  after  for  the  income. 
But  one  after  the  other  their  dividends  were 
passed,  and  they  dropped  down  among  the  "  Fan- 

s  "  to  be  kicked  around  by  both  bull  and  bear. 

At  one  time  the  Vanderbilt  stocks  were  con- 
sidered the  safest  investments  on  the  lists.  But 
times  changed  and  dividends  were  passed  on 
Michigan  Central  and  Canada  Southern  tempora- 
rily. The  Lake  Shore  and  N.  Y.  Central  had  their 
business  cut  into  by  parallel  lines,  causing  the 
former  to  suspend  dividends  for  a  time,  while  that 
of  the  latter  was  reduced  one-half. 

The  following  list  of  stocks  with  the  dividends 
they  pay  per  annum,  are,  in  the  order  named, 
about  the  most  reliable,  so  far  as  things  can  be 
seen  on  the  surface. 


220  STOCK 

Dividend  rate,  per  cenl. 

Chicago  and  Northwestern,  pref. ...   7 

Illinois  Central 8 

Chicago  and  Alton,  pref 8 

Chicago,  Burlington  and  Quincy 8 

Chicago,  Rock  Island  and  Pacific 7 

Pullman  Palace  Car 8 

Delaware,  Lackawanna  and  Western 7 

Chicago  and  Alton,  common 7 

Chicago,  Milwaukee  and  St.  Paul,  pref 7 

Chicago  and  Northwestern,  common 6 

St.  Paul  Omaha,  pref 6 

St.  Paul,  Minneapolis  and  Manitoba 7 

St.  Paul  and  Duluth,  pref 7 . 

Delaware  and  Hudson  Canal  Co 5 

Oregon  Railway  and  Navigation 6 

Lake  Shore  and  Mich.  Southern,  last  div.  .  2 

N.  Y.  Central  Hudson  River 4 

Long  Island 4 

Chicago,  Milwaukee  &  St.  Paul,  common..  5 

The  above  list  are  mostly  active  stocks  which 
fluctuate  more  or  less  widely.  Leased  roads  on 
whose  stocks  dividends  are  guaranteed  are  not 
quoted,  because  such  are  too  closely  held  for  in- 
comes to  be  active  in  the  market.  The  New 
York  Central  Hudson  is  intrinsically  a  very  valu- 
able property,  but  is  crippled  as  a  big  dividend 
payer  by  the  incubus  of  the  West  Shore.  The 
real  estate  of  the  Central  Hudson  in  New  York 
and  other  cities  and  towns  along  its  line  is  esti- 
mated as  worth  at  least  $100,000,000,  besides 
rolling  stock  and  equipments. 


SPECULA  TION.  221 

It  is  the  investor  who  buys  good  stocks  when 
the  price  is  low,  pays  for  them  in  full,  and  keeps 
away  from  the  market,  who  makes  money  and 
grows  rich. 

It  is  the  tape  speculator  and  hanger-on  around 
j  the  brokers'  offices,  who  is  manipulated  in  and  out 
of  the  market,  both  on  the  long  and  short  sides, 
and  milked  by  his  banker  for  frequent  commis- 
sions, and  interest  on  carrying  stocks  when  money 
is  cheap,  who  nine  times  out  of  ten  eventually  loses 
all  the  property  he  has  in  the  world.  The  infat- 
uation of  gambling  is  on  him.  He  is  imbued 
with  the  hallucination  that  he  can  recover  all  his 
losses  by  a  few  lucky  strokes.  And  if  his  or  her 
friends  do  not  step  in  and  institute  proceedings 
in  lunacy,  to  have  the  money  remaining  placed  in 
trust,  he  or  she  will  keep  on  until  they  go  clean 
dead  broke. 

In  the  Fall  of  1886  it  was  stated  by  one  of  the 
Wall  Street  organs,  that  out  of  a  given  number  of 
houses  on  "  the  Street,"  not  one  of  their  custom- 
ers had  closed  out  their  accounts,  during  the  past 
sixteen  years,  with  a  profit  in  the  end. 

One  customer  was  reported  who  had  paid  his 
brokers  over  $10,000  in  commissions,  and  who 
closed  out  his  accounts  with  a  balance  of  only 
$350  left  to  his  name. 

The  following  list  shows  the  highest,  lowest  and 
closing  prices  for  the  year  1886,  and  the  closing 
price  on  March  1,  1887. 


STOCK 


Atlantic  and  Pacific. 

Canadian  Pacific 

Central  Pacific 

Cameron  Coal- 

Canada  Southern 

Chicago  and  Northwest. 


pref. 


Chicago,  Rock  Island  and  Pacific 

Chicago,  Burlington  and  Quincy 

St.  Paul 

"       pref , 

Cincinnati,  Washington  and  Baltimore 

"         pref... 

Colorado  Coal 

Consolidated  Gas 

Hocking  Valley 

Cleveland,  Columbus,  Cincinnati  and  Ind.... 

Delaware,  Lackawanna  and  Western 

Delaware  and  Hudson  Canal  Co 

Denver  and  Rio  Grande..... 

East  Tennessee,  Virginia  and  Georgia 

'*     new.... 
it  a  .«         <<  <<     j st  pref 

n  «•  <«         <«  «<    2(j  pre£ 

Fort  Worth  and  Denver  City  

Green  Bay  and  Winona 

Indiana,  Bloomington  and  Western 

Lake  Shore 

Lake  Erie  and  Western 

"  "  "         assessment  paid  .. 

Long  Island 

Louisville  and  Nashville 

Michigan  Central 

Manhattan  Consolidated 

Memphis  and  Charleston.. 

Milwaukee,  Lake  Shore  and  Western,  pref 

Minneapolis  and  St.  Louis 

"         "         pref 


I3l 

73 

5i? 

44 

7i* 

I20f 
144 

I3I3 
141? 

"a 
125? 

6 
12 

in 
45 
751 

143; 
io8j 

35: 
6; 

18- 


25- 
14 

28; 

lOOi 

18: 

22: 
IOO 

69. 

98* 

175, 

69^ 

103 

23^ 
5^1 


33 

34f 
I04i 
135 
i2o£ 

I28| 

82§ 

116 

2* 

5 
21 

24 
43* 
115 

87 


63* 
H5& 
140 

126* 
I36 
oof 

ir8J! 
6 

10 


3 

I 

11 

67! 

28 

15 

8 
12 

4 

80I 

33t 
61$ 
120 

2CL 

% 

40* 


b4j 

!36f 

io3| 

32i 


SPECULA  TION. 


223 


Missouri,  Kansas  and  Texas 

Missouri  Pacific 

New  Jersey  Central. 

New  York  Central 

New  York,  Chicago  and  St.  Louis 

'•'         pref 

New  York  and  New  England 

Nashville,  Chattanooga  and  St.  Louis 

New  York,  Lake  Erie  and  Western 

"         "         pref 

New  York,  Susquehanna  and  Western 

"         "         pret... 
Northern  Pacific 

Pref 

Norfolk  and  Western 

".       "  '•       Pref 

Ontario  and  Western 

Oregon  and  Trans 

Oregon  Railway  and  Navigation 

Ohio  and  Mississippi 

Pacific  Mail •. 

Peona,  Decatur  and  Evansville 

Richmond  and  West  Point 

Reading 

St.  Paul  and  .Omaha 

St.  Paul  and  Omaha,  pref 

St.  Paul,  Minneapolis  and  Manitoba 

St.  Paul  and  Duluth 

"       pref 

St.  Louis  and  San  Francisco 

pref 

Southern  Pacific 

Texas  Pacific 

"       assessments  paid 

Union  Pacific 

Western  Union 

Wabash,  St.  Louis  and  Pacific,  pref 

"     receipts 


37| 
119 

64 

"71 

17: 
31 

()S 

105 

38f 
81* 

I2# 

33* 
3*| 

2n 

59s 

22# 

38 
I09 

35 
67 

34 

77 

59 

55 
1 1 6 
124 

67 
"5_ 

37f 

774 

28| 
68± 
8o£ 

22 
41 


33? 
108 

55 

"3 

14 

2S 

55 
88 

34i 

73 

12 

333 
27f 

6if 
22I 

52$ 
20 

33f 
104 

29i 

& 

7I, 

36^ 

48^ 
IO9 
115 

58 
I06A 

3I» 

65 

36| 
24| 

24* 

6i| 

75* 

14 

35^ 


o  5 

oS 


3o| 
108 

67 
112I 

6| 
i8f 

6o| 

83 

33i 

71* 

35 
27f 

58^ 

2C4 

47} 
I7f 

3 1* 
ioi| 

27 

54f 
35 
74 
36 
48 
1 08  J 

115 
6o£ 

32i 
65i 


27^ 

I 

30 


224  STOCK 


CHAPTER  XXVII. 

POSSIBILITIES   OF   RAILWAY    FINANCE. 

TO  the  right  sort  of  man  who  has  millions  of 
money  as  a  basis ;  one  whose  head  is  cool 
and  level  at  all  times  ;  one  who  has  great  subtlety 
in  manipulation  ;  who  is  thoroughly  heartless  and 
unscrupulous  in  the  means  to  attain  an  end  ;  who 
upon  occasion  can  buy  up  political  and  judicial 
favors ;  one  who  can  buy  controlling  interests  in 
great  railway  lines  and  has  the  directory  in  the 
hands  of  his  own  creatures  ;  who  can  have  the  rail- 
way reports  of  his  companies  cooked  to  order  for 
speculative  effect ;  one  who  is  cunning  in  inven- 
tion of  plausible  rumors  ;  who  can  water  his 
stocks  and  conceal  his  hand  ;  one  who  is  as  crafty 
and  ruthless  as  a  pirate  in  the  inception  and  final 
culmination  of  his  schemes  :  to  such  a  man,  with 
a  long  career  before  him,  unchecked  by  legal  inter- 
ference and  left  to  work  out  his  designs  undis- 
turbed by  socialists,  communists  and  anarchists, 
the  possibilities  of  speculative  railway  finance  are 
gigantic  and  unlimited. 

Given,  then,  that  such  a  man  could  have  one 
hundred  million  of  dollars  for  a  beginning,  and 
could  have  one  hundred  years  of  active  life  to 
manipulate  the  stock  market — what  then  ? 


SPECULATION.  225 

Why,  profiting  by  the  experience  of  the  most 
successful  Wall  Street  kings,  who  had  made 
great  fortunes  and  left  vast  estates,  he  would 
adopt  their  methods  and  improvise  new  ones  of 
his  own.  He  would  avoid  the  practices  which  so 
often  engulfed  the  great  bears  in  irretrievable  dis- 
aster. 

He  could  employ  brokers  by  the  scores  and 
hundred  to  execute  his  orders  with  entire  secrecy. 
He  could  have  a  news  and  rumor- mill  of  his  own, 
to  allure  the  public  into  the  market,  or  to  freeze 
them  out  as  suited  his  purpose. 

By  buying  51  shares  out  of  every  100  he  could 
get  control  of  railway  corporation  after  corpora- 
tion, and  elect  himself  and  his  own  creatures  to 
the  directory.  He  could  manipulate  the  stock  of 
his  companies  for  stock-jobbing  profits  without 
the  least  regard  to  the  interests  of  the  other  stock- 
holders. 

If  he  wished  to  depress  prices  of  good  stock  to 
buy  them  in  low,  he  could  pass  the  dividends  and 
institute  cut-rate  wars.  If  it  were  non-dividend 
stocks  he  wished  to  buy  cheap  he  could  accom- 
plish the  same  object  by  causing  a  default  in  the 
payment  of  interest  on  their  bonds.  When  he 
had  bought  all  the  stock  he  wanted,  he  could 
send  prices  booming  upward  by  resuming  the  pay- 
ment of  dividends  and  interest  on  stocks  and  de- 
faulted bonds. 


16 


226  STOCK 

If  he  wished  to  buy  up  a  railroad  cheap  which 
was  in  default  in  the  payments  on  its  bonded 
debt,  he  could  purchase  a  majority  of  the  indebt- 
edness, and  by  proceedings  in  foreclosure  and  sale 
could  buy  in  the  road  for  perhaps  less  than  the 
incumbrances  on  it,  thereby  wiping  out  all  its 
stock  capital.  Then  by  reorganizing  a  new  Com- 
pany and  circulating  news  of  great  improvements 
to  be  made  to  rehabilitate  the  road,  he  could 
float  an  immense  amount  of  new  bonds  and  stock, 
and  inflate  their  prices  as  high  as  a  kite  to  sell 
them  out  to  the  lambs  of  Wall  Street. 

The  disastrous  experience  of  such  bears  as 
Daniel  Drew,  Jacob  Little  and  others  would 
admonish  him  never  to  short  the  market  to  be 
cornered  by  opposition  combinations.  He  would 
allow  bears  the  utmost  latitude  in  destroying 
values  when  he  wished  to  buy  low.  When  boom- 
ing the  market  he  would  encourage  the  bears  to 
sell  stocks  short  by  loaning  them,  through  his 
brokers,  all  the  stock  they  wanted  to  make  their 
deliveries.  When  a  large  short  interest  had  ac- 
cumulated he  would  call  in  all  his  loaned  stock, 
corner  the  bears,  exact  high  loaning  rates  and 
make  them  bid  prices  away  up  against  themselves, 
while  he  was  using  them  as  catspaws  to  rake  his 
own  chestnuts  (profits)  out  of  the  fire. 

With  his  hundred  million  of  dollars  as  a  begin- 
ning he  could  buy  and  pay  for  a  million  or  a  mil- 
lion and  a  half  shares  of  stocks,  at  the  bottom  of 


SPECULA  TION.  227 

the  big  declines,  and  slowly  sell  them  out  on  the 
top  of  the  booms  at  profits  of  from  20  to  50  per 
cent.  Some  years  he  could  repeat  the  process 
two  or  three  times  a  year. 

If  he  followed  up  all  his  opportunities  to  trade 
in  his  stocks,  and  to  buy  and  sell  on  all  the  big 
declines  and  advances,  he  would,  with  the  profits 
of  all  his  periodical  sheep  shearings  :  the  dividends 
on  his  stocks,  the  interest  on  the  bonds  he  would 
accumulate  and  on  the  money  he  would  save  by 
tax  evasions,  be  worth  at  the  end  of  100  years  a 
fortune  more  colossal  than  the  present  combined 
wealth  of  all  the  money  kings  of  Europe. 

He  might  acquire  the  control  of  all  the  railroads 
in  the  country,  with  surplus  wealth  enough  to 
compass  the  ownership  of  the  whole  city  of  New 
York  and  entire  towns  and  villages  besides.  But 
what  of  the  vast  multitudes  who,  all  this  time,  had 
*  been  bringing  grist  to  his  mill  ?  Why  !  "  The 
public  be  d — d  !" 


228  STOCK 


CHAPTER  XXVIII. 

EXEGESIS. 

IN  the  history  of  antiquity  we  may  read  of  the 
riches  and  glory  of  Solomon  and  of  the  mag- 
nificent wealth  of  gold  and  jewels  with  which  he 
adorned  the  sanctuary.  We  may  have  a  glimpse 
of  the  opulence  and  luxury  of  the  ancient  Romans. 

But  we  need  not  go  back  beyond  Anno  Domini 
for  faint  glimmers  of  the  game  of  finance — if  game 
there  was. 

We  have  the  evidence  of  Holy  Writ  that  "the 
Son  of  Man  drove  the  money  changers  out  of  the 
Temple." 

We  have  the  inspiration  of  the  Almighty  that 
"he  who  hasteth  to  be  rich  shall  not  be  inno- 
cent." 

That  "  it  shall  be  easier  for  a  camel  to  go 
through  the  eye  of  a  needle  than  for  a  rich  man  " 
(rich  men  like  these)  "  to  enter  into  the  kingdom 
of  Heaven." 

And,  "  What  shall  it  profit  a  man  if  he  gain  the 
whole  world  and  lose  his  own  soul  ?" 

If  the  usual  closing  exercises  were  to  follow  in 
such  a  connection  as  that  in  the  general  scope  of 
this  work,  it  ought  to  be  that  all  right-minded 
people  should  pray  that  from  the  wiles  of  man 


__    . 

and  the  devil,  from  ruined  homes,  from  demorali- 
zation and  other  widespread  evils  of  margin  gam- 
bling "  may  the  good  Lord  deliver  us." 

But  what  is  to  become  of  those  fellows  who  have 
fattened,  and  accumulated  enormous  fortunes  by- 
delusion  and  artifice,  out  of  the  very  life-blood, 
so  to  speak,  of  tens  and  hundreds  of  thousands  of 
their  fellow  creatures?  They  want  to  gain  the 
whole  earth,  but  they  don't  want  to  go  to  the 
infernal  regions. 

In  this  dilemma  a  mighty  expounder  of  the^ 
theory  of  evolution  steps  in  with  an  entire  dis- 
belief in  the  doctrine  of  eternal  punishment. 
I  Hence,  with  no  hell,  no  fire,  no  brimstone  in  pros- 
pect, these  lords  and  mighty  men  of  Wall  Street, 
relieved  of  future  terrors,  will  go  on  erecting 
alaces  cemented  by  the  misery  of  their  victims, 

d  living  in  a  style  of  regal  or  semi-regal  splen- 
dor, with  retinues  of  servants  and  an  entourage 
paid  for  by  profits  wrung  from  their  dupes  by  arti- 
fice and  cunning. 

They  will  cling  to  the  image  of  go)d  until  the 
last.  But  how  will  it  be  when  the  Angel  Gabriel 
shall  sound  his  last  trump  ?  Can  they  elude  the 
vigilance  of  St.  Peter?  Will  they  be  turned 
away  from  the  portals  of  Paradise  with  the  order, 
"  Procul,  O  procul  este,  profani !"  only  to  meet 
the  agent  of  his  Satanic  majesty  to  be  conducted 
to  the  other  place  ?  Who  knows  ?  They  don't ; 
but  they  risk  it  for  the  shimmer  of  gold. 


230  GREA  T 


CHAPTER  XXIX. 


RICH  MEN  OF  EUROPE. 


THE  ENORMOUS  WEALTH  OF  THE  ROTHSCHILDS 
AND  THE  NOBLES. — WEALTHY  DUKES. 

FOR  many  years  the  richest  individual  in  all 
Russia  was  Herr  Steiglitz.  When  he  retired 
from  affairs  in  i860  he  held  property  to  the  value 
of  nearly  ^"2,000,000.  But  the  richest  men  in  the 
land  of  the  Czars  at  the  present  time  are  the  two 
Nobel  brothers.  They  are  of  Swiss  origin.  While 
traveling  through  interior  Russia  they  saw  thou- 
sands of  acres  of  land  aglow  with  the  light  of  oil 
gas.  They  at  once  purchased  entire  districts  of 
the  apparently  worthless  fields,  sunk  oil  wells,  and 
now  control  more  petroleum  than  any  other  con- 
cern in  the  world.  Their  wealth  is  really  beyond 
calculation,  though  a  correspondent  thinks  that 
£80,000,000  is  not  an  extravagant  estimate. 

It  is  to  the  Rothschilds,  however,  that  belongs 
the  honor  of  being  richest  among  men.  Their 
united  properties — and  their  properties  must  be 
considered  as  united  from  their  peculiar  family 
and  business  relations — pass  even  beyond  the  mil- 


WEALTH.  231 

lions.  In  the  last  twelve  years  they  have  loaned 
to  certain  European  governments  nearly  £90,000,- 
000.  Their  lordly  power  is  shown  in  a  modern 
instance.  In  1866  the  Prussian  government  de- 
manded an  indemnity  of  £5,000,000  from  the  city 
of  Frankfort.  The  head  of  the  Rothschild  house 
in  that  city  sent  word  to  Count  Bismarck  that  if 
an  attempt  was  made  to  force  the  levy  he  would 
break  every,  bank  in  Berlin,  and  Bismarck  was 
compelled  to  give  way.  The  enormous  wealth  of 
the  Rothschilds  is  doubly  remarkable  from  the 
fact  that  the  family  was  totally  unknown  a  cen- 
tury ago.  Inferior  only  to  the  Rothschilds  are 
the  Baring  brothers,  who  have  "  at  instantaneous 
command  "  £60,000,000.  It  is  noteworthy  that 
the  Barings  owe  their  commercial  rise  to  an 
American,  Mr.  William  Bigelow,  of  Philadelphia, 
who,  many  years  ago,  had  the  house  appointed 
the  American  Agency  in  London. 

Among  the  richest  of  moderns  is  the  Czar  of 
Russia,  who  enjoys  from  his  personal  estate  an 
income  of  £2,000,000.  The  Sultan  of  Turkey  is 
allowed  for  the  support  of  his  court  over  £1,200,- 
000  ;  in  addition  to  this  he  has  a  private  income 
of  £1,000,000.  The  Emperor  of  Austria  is  granted 
a  yearly  allowance  of  £2,500,000. 

There  are  several  noblemen  in  England  who 
have  immense  wealth   at    their  command.     The 

I  Dukes  of  Buccleuch,  Devonshire  and  Norfolk,  and 
the  Marquis  of  Bute  have  each  of  them  rent  rolls 


232  GREAT 

of  ^"400,000  per  annum.  The  Duke  of  Portland, 
who  died  recently,  left  unentailed  property  of  over 
^"2,000,000.  The  greater  part  of  his  palace  was 
constructed  underground.  His  banquet-hall,  ball- 
room, riding-school,  and  a  number  of  superb  guest 
rooms  are  veritable  tunnels,  decorated  in  a  fashion 
so  splendid  as  to  seem,  when  described,  like  a 
story  of  the  Magi. 

Richer  even  than  any  of  these  millionaires  is 
the  Duke  of  Westminster,  who  undoubtedly  has 
the  largest  income  of  any  individual  in  the  world. 
His  fortune  lies  largely  in  the  diametrically  op- 
posite regions  of  London,  known  as  the  West  End 
and  Seven  Dials.  He  owns  acre  upon  acre  of  the 
most  aristocratic  domain  in  London,  and  his  tene- 
ments cover  miles  in  the  worst  slums  in  the  world. 
His  income  passes  the  limit  of  the  credible,  and  is 
said  by  some  to  amount  to  ^10  a  minute. — London 
Times. 

RICH    PEOPLE   OF   AMERICA. 

Common  report  estimates  the  wealth  of  some 

of  the  richest  people  in  this  country  at  about  the 

following  figures  : 

Estimated. 

The  combined  wealth  of  the  Astors.  $250,000  000 

Cornelius  Vanderbilt 1 1 5,000  000 

W.  K.  Vanderbilt ...  100,000  000 

Jay  Gould 100,000  000 

The  four  daughters  of  the  late  W. 

H.  Vanderbilt  combined 42,000  000 


WEALTH.  233 

Collis  P.  Huntington $40,000  000 

Charles  Stanford 40,000  000 

Mrs.  Mark  Hopkins 30,000  000 

Alexander  Mitchell 30,000  000 

Mrs.  Hettie  Greene 30,000  000 

Mrs.  A.  T.  Stewart  estate 25,000  000 

E.  D.  Morgan  estate 25,000  000 

Moses  Taylor  estate 30,000  000 

David  Dows 15,000  000 

Russell  Sage 15,000  000 

K.obert  Garrett . '. 15,000  000 
red  Vanderbilt 13,000  000 
eorge  Vanderbilt 12,000  000 
Then  there  are  the  Mackays,  the  Fairs  and 
harons  of  California,  the  silver  kings  of  Nevada, 
the  rich  lumber  men  of  the  Northwest,  the  Pack- 
ers and  others  of  Pennsylvania,  the  millionaires 
of  New  England,  the  Crockers  and  Standard  Oil 
people,  with  wealth  ranging  from  ten  to  fifty  mil- 

I lions  each. 
**  Howard,"  in  the  World,  says  :  "  There  are 
hundreds  of  millionaires  in  New  York  of  whom 
the  general  public  never  heard.  There  are  half  a 
hundred  worth  from  two  to  five  millions  each, 
and  at  least  a  score  whose  individual  wealth  may 
be  reasonably  estimated  anywhere  from  $25,- 
000,000  to  $50,000,000,  concerning  whom  the 
ordinary  citizen  is  absolutely  ignorant.  Yet  they 
are  men  of  affairs  whose  transactions  affect  com- 
mercial relations  that  belt  the  globe — whose  busi- 


234  GREAT 

ness  conduct  has  something  to  do  with  every 
known  industry  in  which  mechanics,  oil,  light  and 
fuel  are  factors." 

"  It  used  to  be  said  throughout  New  England, 
'The  young  men  go  to  New  York  to  seek  a  for- 
tune.' Now,  it  is  said,  '  The  men  of  the  country, 
from  the  golden  shores  of  California  and  the 
snow-clad  hills  of  the  Sierra  Nevada  range,  from 
the  cattle  kings  of  the  great  middle  lands  to  the 
coal  barons  and  the  petroleum  princes  of  the  Mid- 
dle States,  go  to  New  York'  to  spend  their 
fortunes.'  " 

"  Phenomenally  rich  and  extraordinarily  quiet 
about  it,  like  all  the  others,  like  the  oil  men  and 
the  iron  men,  and  the  soap  men  and  the  stock 
speculators  in  California,  they  have  come  to  this 
city  as  to  a  place  of  refuge,  a  place  large  enough 
to  insure  quiet,  a  place  crowded  enough  to  make 
desirable  privacy  certain." 

Speaking  of  the  opening  night  of  the  season  at 
the  Metropolitan  Opera  House,  "  Howard  "  fur- 
ther says :  "  It  is  a  curious  fact  that  the  men  who 
will  to-morrow  night  occupy  their  boxes,  are  the 
actual  possessors — not  the  representatives,  mind 
you,  but  the  actual  possessors — of  property ;  that 
is,  real  estate,  bonds  and  stock  of  various  names, 
estimated  modestly  in  the  stupendous  sum  of 
eight  hundred  millions  of  dollars,  while  million- 
aires and  quintuple  millionaires  will  be  as  plenti- 
ful in  the  opera  house  as  pebbles  in  an  aquarium." 


WEALTH.  235 

The  one  million  millionaires  are  so  plenty  that 
they  do  not  count  for  as  much  now  as  a  $5,000 
man  did  a  hundred  years  ago. 

After  W.  H.  Vanderbilt's  death  there  was  a 
rumor  that  a  private  inventory  of  his  money  and 
securities  in  the  vaults  of  the  Lincoln  National 
Bank  revealed  a  market  value  of  $305,000,000  in 
personal  property  alone.  But  this  was  rumor 
mly. 


236  INEQUALITIES 


CHAPTER  XXX. 

THE   INEQUALITIES   OF  TAXATION. 

RAILWAY  bonds  are  taxable  as  personal  prop- 
erty, just  as  much  as  mortgages  or  money. 
But  of  the  thousands  of  millions  of  dollars  in  rail- 
way bonds,  it  is  hardly  probable  that  one-half  in 
amount  of  these  bonds  pays  any  tax  whatever. 
The  desire  to  evade  taxation  and  throw  the  pub- 
lic burdens  on  other  people's  shoulders  is  almost 
universal.  Men  who  will  tell  the  truth  in  almost 
everything  else  ;  men  whose  word  is  said  to  be  as 
good  as  their  bond,  will  fib  and  quibble  to  keep 
down  their  taxes. 

The  richer  a  man  is,  particularly  if  he  is  a  specu- 
lative gambler,  the  more  prone  he  is  to  shirk  his 
just  share,  or  evade  taxes  altogether. 

Railway  stocks  are  exempt  in  the  hands  of  their 
holders,  for  the  reason  that  the  roads  pay  local  and 
State  taxes  all  along  their  lines.  That  is  all  right 
and  just  enough.  But  stocks  are  too  often  made 
a  bulwark  and  shield  behind  which  evasions  are 
made  of  taxable  property  to  the  amouut,  in  the 
aggregate,    of   hundreds    of    millions    of   dollars, 


OF  TAXATION.  237 

metimes  even  of  millions  and  tens  of  millions 
in  the  hands  of  one  man,  or  in  an  estate. 

The  consequence  of  this  condition  of  affairs  is, 
that  every  farmer,  every  owner  of  real  property 
and  every  person  who  honestly  gives  a  true  account 
of  his  personal  property  for  taxation,  has  to  pay  a 
largely  increased  tax-rate  to  make  up  the  losses  on 
the  evasion   of  assessments.     Many  of  these  tax 

Ivaders  are  a  thousand  and  ten  thousand  times 
lore  able  to  pay  their  equitable  share  out  of  their 
normous  surplus  income,  than  are  more  honest 
eople  out  of  the  proceeds  of  poorly  requited  toil 
and  to  the  deprivation  of  personal  comforts. 

The  New  York  World  in  its  exposures  of  the 
tax  evasions  in  1886,  says :  "  The  poor  who  have 
a  few  hundreds  laid  by  in  savings  banks  for  a  rainy 
ay,  drawing  3  per  cent,  interest,  must  pay  out  of 
at  meagre  income  2-f-fa  towards  making  up  the 
deficiency  caused  by  those  who  shirk  their  share 
of  the  city  taxes.  An  instance  of  this  injustice 
was  demonstrated  while  the  reporters  were  look- 
ing  over   the   books. ,  a   colored   barber, 

ho  after  many  years  had  saved  up  and  put  in 
avings  banks  $3,000,  on  which  he  gets  $90  a  year 
interest,  called,  and,  with  tears  in  his  eyes,  paid 
$68.70  tax  on  his  money,  leaving  him  but  $21.30. 
A  widow  having  a  few  thousand  dollars  left  her 
by  her  husband,  was  in  a  like  position." 

Poor  people  who  have  no  real  or  personal  prop- 
erty to  be  assessed,  have  to  pay  a  grinding  tax  in 


I 


238  INEQUALITIES 

increased  rents  to  landlords  and  in  the  enhanced 
cost  of  provisions  and  clothing. 

As  a  rule,  especially  in  the  country,  every  man's 
word  is  taken  as  to  the  amount  he  is  liable  to  be 
taxed  for.  Occasionally  a  man  who  underrates 
his  property  by  a  few  hundreds  or  a  few  thousands 
has  his  personal  valuation  put  up  to  a  high  figure, 
and  is  made  to  swear  it  down,  if  he  can,  or  com- 
pelled to  stand  it.  This  is  too  often  done  to 
gratify  personal  spite  on  the  part  of  the  assessor 
or  his  friends,  who  put  him  up  to  it  ;  the  assessor 
always  taking  refuge  under  the  plea  that  he  is  only 
doing  his  duty  ;  and  this  too  often  when  he  knows 
he  is  making  mockery  of  his  oath  of  office  in  know- 
ingly allowing  others  to  evade  taxes  to  a  far  larger 
amount. 

This  is  all  wrong.  The  law  or  the  practice 
should  compel  every  one  to  verify  his  assessment 
every  time  it  is  made  ;  then  if  he  willfully  per- 
jures himself,  let  him  take  the  consequences  when 
found  out. 

Ours  is  a  free  country.  We  want  no  harsh,  ar, 
bitrary,  or  despotic  laws.  Legislation  should  be 
just,  equitable  and  beneficent. 

The  huge  speculative  gamesters  and  their  stool 
pigeons  in  the  New  York  markets  should  be 
brought  to  book.  They  prey  on  the  credulity 
and  grow  enormously  rich  at  the  expense  of 
thousands  of  dupes.  Many  have  overflowing  cof- 
fers of  money  and  taxable  securities.    Once  a  year 


OF  TAXATION.  239 

the  tax  office  it  is  nothing  new  to  see  million- 
ires  shirk  taxation  under  the  plea  that  their  per- 
sonal property  is  all  in  stocks.  Death,  or  some 
other  circumstance,  reveals  the  fact  that  a  deliber- 
ate felony  has  been  committed. 

If  these  men  will  not  bear  their  honest  share  of 
the  public  burdens,  then,  in  justice  to  the  people 
at  large,  let  us  have  thumb-screw,  star  chamber 
inquisition  laws  to  take  these  high  priests  of  the 
great  god  Mammon  by  the  throat  and  make  them 
isgorge  without  a  chance  of  evasion. 

There  are  scores  on  scores  of  bears  in  the  stock 
market.  Small  bears  put  up  from  $1,000  to 
$10,000  as  margin  on  short  sales.  Big  bears  put 
up  from  $100,000  to  $1,000,000  for  the  same 
purpose.  They  are  dealing  in  stocks  to  be  sure, 
but  they  don't  own  the  stocks  they  sell.  They 
have  none,  and  have  no  more  claim  to  exemption 
from  assessment  than  if  their  money  was  in  visible 
real  estate. 

Their  speculative  interest  is  a  mere  gamble,  a 
bet  that  prices  of  that  they  sell,  but  did  not  have 
to  sell,  will  decline.  Besides  the  margin  put  up, 
rudent  bears  will  have  thousands  or  hundreds  of 

ousands  of  dollars  in  cash  reserves  for  contin- 
encies.  This  money  should  be  assessed,  but 
precious  little  of  it  ever  pays  any  tax. 

There  are  dealers  in  stocks  and  commercial 
paper,  which  latter  is  taxable.  They  may  be 
carrying  from  $50,000  to  $500,000  of  these  prom- 


240  INEQUALITIES 

issory  notes  and  bills  of  exchange.  But  the  magic 
word  stocks  comes  in,  or  "  our  liabilities  exceed 
the  value  of  our  assets." 

The  tax  dodger  is  indigenous  to  both  city  and 
country.  They  fall  back  on  stocks,  or  unhesita- 
tingly make  affidavit  that  their  debts  exceed  the 
value  of  their  personal  property,  in  whole  or  in 
part. 

There  are  millions  upon  millions  of  dollars 
locked  up  in  the  safes  of  greedy  Wall  Street  spec- 
ulators that  never  pay  one  dollar  of  just  taxation. 
These  men  are  not  ignorant.  They  are  the 
sharpest  and  shrewdest  men  in  the  city.  They 
study  the  law  to  evade  it.  They  will  pay  thou- 
sands on  thousands  of  dollars  to  unscrupulous  law- 
yers to  baffle  justice.  It  is  a  luxury  to  rob  the 
government  and  defraud  the  people.  w 

A  certain  fixed  sum  is  levied  for  State  expenses, 
other  fixed  sums  are  wanted  to  sustain  municipal 
governments  in  cities,  and  to  pay  expenses  of 
towns  and  counties.  It  is  evident  that  if  the 
richer  class  shirk  their  due  share,  the  greater  part 
of  the  burden  must  fall  on  people  who  are  least 
able  to  bear  it. 

Directly  and  indirectly  this  question  affects 
everybody.  An  entire  revision  of  the  tax  laws 
should  not  longer  be  delayed. 

One  instance  revealed  $30,000,000  of  taxable 
railway  bonds  in  the  hands  of  one  man,  which  was 
assessed  for  only  a  fraction  of  a  million. 


OF  TAXATION.  241 

The  king  pin  of  all  the  capitalists  for  years 
paid  no  personal  tax.  The  pressure  of  public 
opinion  at  last  brought  out  an  assessment  of 
$1,000,000  which  remained  at  that  figure  until 
after  his  death.  Then  his  will  revealed  $33,000,- 
000  of  clear  palpable  taxable  personal  property, 
which  was  bound  up  to  be  held  as  a  trust  fund. 
How  much  more  was  covered  and  concealed  in  a 
wonderful  residuary  estate,  of  which  no  public 
inventory  was  taken,  is  only  known  to  those  im- 
mediately interested. 

According  to  the  World's  exposure,  this  great 
fund  of  $33,000,000  went  on  the  assessment  roll 
last  year  at  only  $8,000,000,  an  evasion  of  $25,- 
000,000.  The  failure  to  collect  the  tax  on  this 
sum  in  this  one  instance,  in  New  York,  increased 
the  tax  rate  from  $2.20  per  $100  to  $2.29  per  $100, 
so  that  other  taxpayers  had  to  pay  the  taxes  on 
this  $25,000,000  that  was  dodged. 

People  estimated  and  known  to  be  worth  from 
five  million  to  way  up  in  the  tens  of  millions,  get 
off  with  a  personal  assessment  of  from  $25,000  up 
to  $500,000. 

The  banks  assessed  on  their  capital  stock  en- 
deavor to  shirk  their  share  of  the  tax.  They 
claim  that  under  section  5,2 19  of  the  Banking  Act, 
passed  in  the  sixties,  a  bank's  stock  should  not  be 
assessed  against  the  bank  as  a  corporation,  but 
against  the  shareholders  individually.    A  majority 


17 


242  INEQ  UA  LI  TIE  S 

of  the  banks  brought  suit  against  the  city  to  re- 
strain it  from  collecting  the  tax. 

Seventy-five  banks  were  assessed  on  an  aggre- 
gate capital  of  $60,746,294,  representing  882,000 
shares,  which  were  held  by  21,946  shareholders. 

If  bank  shares  were  to  be  assessed  against  the 
individual  holders  of  such  shares,  then  the  city,  it 
is  alleged,  would  lose  almost  the  entire  tax  avail- 
able therefrom,  because  holders  would  then  claim, 
as  it  is  done  in  thousands  of  cases,  that  their  debts 
exceed  their  assessable  personal  property. 

There  are  scores  of  men  within  the  arena  of 
speculation  wrho  have  grown  wealthy,  if  not  enor- 
mously rich,  some  out  of  commissions,  others  by 
profits  filched  from  the  pockets  of  deluded  fools. 
Many  of  these  fellows  who  have  grown  rich  by 
immunity  do  not  contribute  a  dollar  of  personal 
tax,  or  pay  anything  for  the  privileges  and  protec- 
tion they  enjoy  under  our  National,  State  and 
municipal  government. 

In  New  York  city,  during  the  Fall  and  Winter 
of  1886-7,  the  World  brought  to  light  and  exposed 
about  $100,000,000  of  personal  property  in  the 
hands  of  private  individuals,  in  estates,  city  rail- 
road and  gas  light  companies,  which  was  taxable, 
but  evaded  taxation. 

This  sum  if  assessed  would  have  brought  in  a 
tax  of  about  $2,000,000.  The  World's  facts  and 
figures   lead   to   the    irresistible   conclusion  that 


OF  TAXATION.  243 

there  are  hundreds  of  millions  of  dollars  of  per- 
sonal property  which  escapes  assessment. 

Of  all  great  American  fortunes,  that  of  the 
Astors  was  undoubtedly  one  of  the  most  honor- 
ably acquired,  and  bears  the  most  honest  share  of 
the  burdens  of  taxation.  This  is  so  because  the 
great  bulk  of  the  Astor  property  is  in  real  estate. 
A  large  tax  is  also  paid  on  personal  property. 

The  Astor  fortune  originated  in  honorable  trade. 
Then  it  increased  rapidly  by  investments  in  real 
estate  when  land  could  be  purchased  for  far  less 
per  acre  than  it  can  now  be  bought  by  the  square 
foot.  Its  subsequent  growth  is  a  part  of  the  his- 
tory of  the  growth  and  prosperity  of  the  great  city 
of  New  York.  It  was  not  built  up,  as  are  many 
railway  speculative  fortunes,  at  the  expense  of  the 
loss  and  suffering  of  tens  of  thousands  of  foolish 
and  deluded  people. 

The  original  John  Jacob  Astor,  when  asked,  in 
his  old  age,  if  he  had  not  too  much  real  estate, 
said  :  "Could  I  begin  life  over  again  knowing 
what  I  now  know  and  had  money  to  invest,  I 
would  buy  every  foot  of  land  on  Manhattan 
Island." 


244  KING 


CHAPTER  XXXI. 

KING   BACCHUS. 

NEXT  to  brokerage  banking,  probably  the 
most  profitable  business  places  within  the 
area  of  speculation  are  the  restaurants,  lunch  buf- 
fets and  drinking  saloons.  Of  these  Delmonico's 
gets  the  cream  of  patronage  and  takes  the  lead 
in  style. 

The  Broadway  Delmonico's  for  a  long  time 
adjoined  the  Equitable  Insurance  building  be- 
tween Pine  and  Cedar  streets — in  fact  was  an 
annex  to  it.  In  consideration  of  a  moderate 
rent  for  the  building  Delmonico  was  to  furnish 
meals  and  lunches  to  the  tenants  of  rooms  in  the 
Equitable  building  at  a  less  rate  than  to  all  other 
customers.  The  restaurant  used  the  entire  five 
stories.  The  rent  was  $20,000  a  year.  The  bar, 
cuisine  and  waiter  service  probably  cost  more 
than  the  rent. 

Another  Delmonico's  was,  and  is,  three  doors 
below  the  Stock  Exchange,  running  through  the 
block  from  Broad  to  New  Streets.  The  rent  and 
other  expenses  of  this  was  as  great  as  in  the 
other.  A  third  down-town  Delmonico's  is  on 
Beaver  Street. 


BACCHUS,  245 

The  business  done  at  these  three  restaurants 
was  immense,  and  the  profits  correspondingly- 
large.  With  first-class  chefs,  obsequious  waiters, 
a  splendid  service,  the  richest  liquors  and  rarest 
vintages,  not  to  go  to  Delmonico's  for  one's  lunch 
or  tipple  was  to  lose  caste  on  "  the  Street." 

The  bar  and  lunch  counters  were  on  the  first 
floor.  If  one  wanted  a  square  meal  he  or  she 
could  go  up-stairs  and  have  their  wants  attended 
to,  to  order.  A  porterhouse  steak  and  fixings  for 
one  was  a  trifle  of  $1.50,  and  with  accompaniment 
of  wines  and  liquors  the  bill  could  be  run  up  to 
$5  or  $10.  He  could  order  soft  crabs,  terrapin, 
mushrooms  or  anything  he  wanted  in  its  season. 

The  Broadway  Delmonico's  and  the  Metropoli- 
tan Bank  building  adjoining,  on  the  corner  of  Pine 
Street,  were  torn  down  in  1885  to  make  room  for 
the  enlargement  of  the  Equitable  building. 

These  down-town  places  derived  their  chief 
patronage  from  the  bankers,  brokers  and  specu- 
lators during  business  hours.  The  up-town  Del- 
monico's, at  Madison  Square,  is  famous  all  over 
the  civilized  world  for  its  recherche  dinners,  pub- 
lic and  private  banquets. 

On  the  death  of  the  late  Charles  Delmonico 
there  were  no  males  of  the  name  in  the  family  to 
carry  on  the  business.  Charles  Delmonico  Crist, 
a  nephew,  came  in  possession,  and  thereupon  pro- 
cured  a   legal  transformation   of  his  name   into 


246  KING 

Charles  C.  Delmonico  to  retain  his  name  for  his 
restaurants. 

There  are  saloons  on  every  block,  sometimes 
two  or  three  adjoining  each  other,  fitted  up  with 
splendid  bars,  mirrors,  cut  glass,  and  caterers  to 
preside  over  free  lunch  side-boards,  where  soup, 
boiled  ham,  roast  beef,  baked  beans,  crackers  and 
cheese  are  served  out  galore. 

A  bottle  of  beer  is  ten  cents,  a  whisky,  15  to 
20  cents,  a  pony  of  brandy,  20  to  25  cents,  with 
Pomery  Sec,  Burgundy  and  the  "Widow  Cliquot" 
up  in  proportion. 

In  no  other  business  is  the  strain  on  one's  mind 
so  tense  as  in  speculation.  Men  by  the  hundreds 
go  out  to  seek  relief.  In  an  adverse  market  the 
excitement  of  mind  often  overmasters  the  effect 
of  the  first  few  glasses  of  liquor.  From  this  habit 
of  going  out  to  "  brace  up  "  many  of  these  men 
become  the  hardest  drinkers  in  the  world.  Women, 
too,  brace  up  with  bottles  of  beer  brought  by 
messengers. 

Not  all  Wall  Street  men  drink,  but  very  many 
do.  In  the  financial  panic  of  '84  men  were  seen 
to  pour  out  and  toss  off  at  a  gulp  a  full  half  glass 
of  undiluted  brandy.  Others  stiff  potations  of  the 
still  more  fiery  absinthe.  The  next  day  or  two 
the  names  of  one  or  more  of  them  would  appear 
in  the  news  tissues  as  "  busted." 

So  great  at  times  are  the  vicissitudes  of  the 
Street  that  men  dressed  in  the  height  of  fashion, 


BACCHUS.  247 

with  gold  jewelery  and  sparkling  diamonds,  ac- 
customed to  deal  in  stocks  by  the  thousand  share 
lots,  and  to  feed  upon  the  fat  of  the  land  at  Del- 
monico's,  will  become  so  impecunious,  that  for 
something  to  eat  they  will  descend  on  the  second 
or  third-rate  saloons.  With  a  glass  of  beer  they 
take  their  chance  at  the  side-boards,  as  free  lunch 
fiends,  to  gobble  up  as  much  food  as  would  cost 
15  to  20  cents  at  the  restaurants. 

Then  there  are  basement-cellar  saloons  with 
beer  and  liquors  at  5  and  10  cents  a  glass,  and  a 
free  lunch  table  with  baked  beans,  pickled  tripe, 
crackers  and  cheese. 

The  following  lines  were  published  in  1820,  and 
described  the  young  men  of  the  period  in  the 
then  village  of  Brooklyn.  It  is  no  doubt  to-day 
equally  apropos  to  the  pursuits  and  club  life  of 
the  young  men  of  the  great  village  of  New  York : 

"FOR  THE  LONG  ISLAND  STAR. 

To  the  Editor, — 

Dear  Sir,  I  hope  your  goodness  will  excuse 

This  humble  effort  of  a  female  pen  ; 
And  trust  you  can't  ungallantly  refuse 

To  print  it  for  those  bipeds,  call'd  young  m«n. 

For  surely,  Sir,  this  village  oft  presents 

As  strange  anomaly  as  e'er  was  known  ; 
Ladies  all  lonely!  while  the  dandy  gents 

Sit  at  the  porter  house,  or  stroll  the  town. 


248  KING  BACCHUS. 

Alas  the  age!  when  ladies'  sparkling  eyes, 

No  more  can  charm  like  sparkling  ale  and  beer  ; 

"  O  temporal"  must  lovers'  fragrant  sighs, 
Have  lesser  fragrance  than  the  fam'd  segar  ? 

No  more  th'  inviting  circle  they  regard, 

Where  wit  and  beauty  spread  a  sweet  repast  . 

Oysters  and  terrapins  usurp  the  board; 
Exalted  pleasures — most  refined  taste! 

What  are  the  rising  prospects  of  the  land, 

When  female  charms  no  more  can  "  wake  the  soul  ;" 

What  are  our  hopes,  when  many  a  youthful  band, 
Pay  early  court  to  pleasure's  poisoning  bowl  ? 

— j  ULIA. 


WALL  STREET  DETECTIVES.  249 

CHAPTER  XXXII. 

WALL    STREET   DETECTIVES. 

THE  financial  centres  of  the  city  are  under 
constant  watch  by  detectives  in  the  em- 
ploy of  the  Municipal  Government.  They  are 
more  or  less  fashionably  dressed ;  wear  Prince 
Albert  coats,  white  high  hats  or  derbys  in  Sum- 
mer, black  derbys  or  high  silk  hats  in  Winter, 
with  shoes  highly  polished. 

No  one  but  the  habitues  of  the  Street  would 
suspect  these  urbane  gentlemen  of  having  any 
business  but  to  idle  away  their  time.  A  couple 
of  these  gentry  used  to  stand  by  the  hour  on  the 
Broadway  corner  of  Wall  Street,  and  then  saunter 
around  to  other  positions,  down  Wall  or  Broad 
Streets,  keeping  a  keen  eye  on  every  passer-by. 
They  were  chiefly  notable  for  their  enormous 
mustaches  and  imperials. 

The  detectives  are  supposed  to  know  all  the 
prominent  thieves,  pickpockets,  sharpers  and 
bunco  steerers  in  the  country,  certainly  all  those 
whose  portraits  adorn  the  rogues'  gallery.  If  any 
such  appear  on  "  the  Street"  the  detective  taps 
him  on  the  shoulder  and  tells  him   to   skip ;  or 


250  WALL     STREET 

arrests  him,  if  caught  plying  his  vocation,  or  i 
wanted  for  a  past  offence. 

On  one  occasion  a  most  singular-looking  object 
dressed  in  baggy  clothing,  like  a  Turk,  and  feai 
fully  ragged,  with  an  old  cap  on  his  head  and  lonj 
unkempt  hair  streaming  around  his  face,  stood  fo 
about  two  hours  on  the  Wall  Street  cornei 
Policemen,  one  by  one,  on  their  rounds,  steppei 
up  to  order  him  to  move  on,  but  on  his  whisperin; 
a  word  in  their  ear,  they  each  left  him  and  passe< 
on.  He  was  a  picture  to  contemplate,  but  unde 
his  rags  and  apparent  squalor  there  was  an  aler 
body  and  a  keen,  glittering  eye  that  took  in  every 
body.  He  was  a  detective  under  cover,  on  th< 
lay  for  some  criminal  whom  he  alone  knew. 

One  of  the  main  offices  of  Pinkerton's  Nationa 
Detective  Agency  is  just  below  the  Stock  Ea 
change,  on  the  corner  of  New  Street  and  Exchang 
Place. 

There  are  a  score  or  more  of  private  detectiv< 
agencies  in  various  parts  of  the  city.  Some  o 
them  follow  the  most  infamous  business  unde 
heaven.  If  there  is  a  plot  to  ruin  some  othe 
man  a  detective  is  put  on  his  track  and  evideno 
manufactured.  Does  a  man  doubt  his  wife  ?  I 
the  wife  jealous  and  suspicious  of  her  husband 
If  so,  one  or  both  put  a  detective  on  the  trail  o 
the  other.  The  detectives  play  a  game  of  thei 
own  to  bleed  their  principals  as  long  as  possible 


DETECTIVES.  251 

The  whole  thing  ends  in  moonshine,  or  in  a  de- 
nouement that  tears  families  asunder. 

On  the  failure  of  the  Marine  Bank  and  Grant 
&  Ward,  the  "  Napoleon  of  Finance  "  was  placed 
under  the  espionage  of  a  dozen  private  detectives. 
He  was  followed  home  at  night  ;  a  detective  sat 
on  guard  in  the  hall  of  his  house  ;  others  were  on 
guard  all  around  the  block.  To  escape  over  the 
roofs  and  down  a  friendly  scuttle  was  impossible. 
He  was  followed  to  his  office  in  the  morning  ;  de- 
tectives were  in  the  office  and  halls  ;  outside  all 
the  approaches  to  the  building  were  guarded. 
No  one  could  come  in  or  go  out  except  under  the 
surveillance  of  these  Hawkshaws  and  Vidocqs  un- 
til he  was  finally  arrested. 


252  GOVERNMENT 


CHAPTER  XXXIII. 

THE   SUB-TREASURY. 

THOSE  chapters  in  this  book  which  treat  of 
the  operations  of  the  Treasury,  Assay  Office, 
Custom  House  and  the  National,  State  and  Sav- 
ings Banks  relate  only  to  true  finance,  with  none 
of  the  features  of  speculative  gambling  about 
them. 

The  United  States  Sub-Treasury  is  on  the 
second  block  from  Broadway,  at  the  corner  of 
Wall  and  Nassau  Streets,  running  the  length  of 
the  block  to  Pine  Street.  It  stands  on  a  spot  his- 
torical as  the  site  of  Federal  Hall  in  the  time  of 
the  Revolution. 

Although  but  two  stories  in  height,  it  is  an  im- 
posing building,  built  after  the  Roman  Doric 
order  of  architecture,  of  massive  granite  blocks, 
with  plain  cornices  and  entablature.  It  has  a 
gable  roof  projecting  far  out  over  the  porticos  of 
the  Wall  and  Pine  Street  fronts.  The  pediments 
are  supported  by  eight  fluted  granite  columns  on 
each  end.  They  are  so  immense  that  they  were 
built  up  in  sections  of  five  pieces  in  each  column. 

The  floors  are  of  stone,  the  doors  are  iron,  and 
the  windows  are  protected  by  a  grating  of  round 


FINANCES.  253 

steel  bars  an  inch  in  diameter,  making  it  one  of 
the  strongest  and  most  absolutely  fire-proof  build- 
ings in  this  country.  With  its  constant  guard  of 
men,  it  is  practically  impregnable  against  robbers 
and  mobs.  Great  secrecy  is  maintained  as  to  its 
means  of  defense,  and  every  precaution  is  taken 
to  make  it  a  safe  depository. 

The  inside  centre  is  lighted  by  a  dome.  The 
building  was  formerly  used  as  the  Custom  House 
until  1862.  All  the  receipts  from  customs,  inter- 
nal revenue  and  from  sales  of  contraband  goods 
sold  from  United  States  bonded  warehouses  are 
turned  into  the  Treasury  here  or  at  Washington, 
whichever  place  may  be  nearest. 

Besides  which,  many  of  the  banks  deposit  their 
surplus  of  gold  and  silver  coin  in  exchange  for 
gold  and  silver  certificates. 

The  transactions  in  money  are  simply  enormous, 
and  have  been  as  high  as  $900,000,000  in  a  single 
year.  It  has  had  $200,000,000  of  cold  cash  in  its 
vaults  at  one  time,  and  900  tons  of  silver  in  one 
vault.  It  had  $38,000,000  in  silver  dollars  stored  in 
bags  at  one  time. 

The  Assistant  Treasurer  of  the  United  States 
at  New  York  is  ex-officio  a  member  of  the  Associ- 
ation of  Clearing  House  Banks.  In  the  daily 
clearances  the  debtor  or  creditor  balances,  in  favor 
or  against  the  Treasury,  vary  from  a  few  thousands 
up  into  the  millions.     The  average  balances  one 


254  GO  VEKNMEN  T 

way   or  the  other  are  generally    in  the  hundred 
thousands. 

On  Saturday,  March  5th,  1887,  the  Sub-Treas- 
urer was  debtor  at  the  Clearing  House  in  the  sum 
of  $843,526.61,  and  the  statement  of  business  for 
that  day  was : 

Receipts $1,466,292  27 

Payments 1,476,121  47 

Coin  Balances          133,554,447  74 

Currency  Balances 19,198,241   32 

Coin  Certificates  Outstanding  18,944,886  00 

The  most  busy  time  is  when  the  pension  pay- 
ments are  made.  About  200,000  checks  come  in 
and  are  paid  at  the  Sub-Treasury  every  Decem- 
ber, March,  June  and  September.  In  December, 
1885,  it  was  computed  that  the  checks  so  paid,  if 
placed  one  on  top  of  another,  would  make  a  pile 
seventy-one  feet  high. 

Called  bonds  for  redemption  have  to  be  sent  to 
the  Secretary  of  the  Treasury  at  Washington  and 
are  paid  there  by  checks.  These  checks  and  the 
interest  on  U.  S.  Bond  coupons  are  paid  either  in 
Washington  or  New  York,  as  may  be  most  con- 
venient. 

The  office  is  splendidly  managed  and  is  no 
place  for  drones.  The  Assistant  Treasurer,  Mr. 
Charles  J.  Canda,  is  a  gentleman  of  great  executive 
ability,  a  thorough  financier,  and  rules  his  force 
with  a  kind  but   firm    hand.      He  is  ably  assisted 


FINANCES.  255 

by  Mr.  William  Sherer,  who  has  been  connected 
with  the  Treasury  for  more  than  twenty  years. 

When  Assistant  Treasurer  Acton's  time  expired 
and  he  retired  to  give  place  to  Mr.  Canda,  the 
fact  that  a  difference  of  but  three  cents  existed  in 
the  balance  sheet  of  property  turned  over,  and 
that  in  favor  of  good  measure,  speaks  volumes, 
and  is  a  bright  commentary  upon  the  honesty  and 
integrity  of  the  working  force  of  the  office,  when 
we  consider  the  enermous  sums  of  money  handled. 

STATUE   OF    WASHINGTON. 

The  ascent  to  the  portico  of  the  Treasury  on 
the  Pine  Street  front  is  two,  three  and  four  steps 
up  from  the  sidewalk,  according  to  the  grade  of 
the  street.  Nassau,  from  Pine  to  Wall  Street, 
slopes  downward,  so  that  the  ascent  to  the  portico 
on  the  Wall  Street  front  is  by  a  flight  of  eighteen 
stone  steps  extending  the  whole  width  of  the 
building. 

This  end  of  the  Treasury  stands  partly  facing 
the  Drexel  building  opposite  and  partly  looking 
down  Broad  Street. 

Built  in  the  centre  of  the  steps  of  the  Treasury, 
and  rising  from  the  level  of  the  Wall  Street  side- 
walk, is  a  base  about  fifteen  feet  square  and  six 
feet  high.  On  the  front  is  the  inscription  in 
letters  cut  into  the  stone  : 

"  On  this  site  in  Federal  Hall,  April  30,  1789, 


256  GO  VERNMEN  T 

George  Washington  took  the  oath  as  first  Presi- 
dent of  the  United  States  of  America." 

Lying  flat  on  top,  forward  of  the  centre  of  the 
base,  is  a  well-preserved  reddish-brown  flagstone, 
about  five  feet  wide  by  ten  feet  long,  and  on  it  is 
inscribed  in  chiseled  letters : 

"  Standing  on  this  Stone,  in  the  balcony  of 
Federal  Hall,  April  30,  1789,  George  Washington 
took  the  oath  as  first  President  of  the  United 
States  of  America." 

The  marbfe  pedestal  stands  back  of  the  brown 
flagstone  on  top  of  the  base,  and  on  one  side  is  in- 
scribed : 

"  Erected  by  Voluntary  Subscription  under  the 
Auspices  of  the  Chamber  of  Commerce  of  the 
State  of  New  York,  November  26,  1883." 

The  top  of  the  pedestal  is  about  a  foot  above 
the  floor  of  the  portico  of  the  Treasury,  and  on 
it  stands  the  colossal  bronze  statue  of  Washing- 
ton, facing  south. 

The  face  has  a  reflective,  benignant  expression, 
the  right  arm  is  half  outstretched,  with  the  hand 
palm  down  and  fingers  pointing  over  towards  the 
Stock  Exchange,  on  Broad  Street  opposite,  as  if 
in  deprecation. 

Thrown  back  from  the  shoulders  is  a  mantle  of 
bronze  reaching  to  the  ankles.  The  statue  was 
designed  by  J.  Q.  Adams  Ward,  the  sculptor,  and 
his  name  is  on  the  base  of  the  bronze,  as  is  also 


FINANCES.  257 

"  The    Henry    Bonnard    Brenze   Manufacturing 
Company  of  New  York,  1883." 

THE   ASSAY   OFFICE. 

The  Assay  Office  adjoins  the  Sub-Treasury  on 
Wall  Street,  separated  only  by  an  alley  on  which 
is  a  car  track,  with  a  hand  truck  to  roll  the  crude 
bars  of  precious  metal  up  to  the  door  of  the 
smelting  room  as  it  is  delivered  from  trucks  in  the 
street. 

In  front  it  is  a  low,  studded,  white  marble 
building  two  stories  in  height,  and  has  nothing 
imposing  in  appearance.  In  the  rear  is  a  five 
story  and  basement  building  where  the  work  of 
melting  and  refining  is  carried  on. 

The  Treasury  and  Assay  Office,  previous  to  the 
war  of  the  rebellion,  were  both  in  these  buildings, 
while  the  present  Treasury  was  used  for  a  Custom 
House. 

In  1862,  owing  to  the  enormous  increase  in  the 
business  of  the  Government  on  account  of  the 
war,  these  buildings  were  found  inadequate.  The 
Merchants'  Exchange,  further  down  on  the  oppo- 
site side  of  Wall  Street,  was  purchased  for  $1,000,- 
000,  and  the  Custom  House  removed  there. 

The  Treasury  was  then  moved  into  its  present 
quarters,  and  a  part  of  the  Assay  Office  business 
was  also  transacted  in  the  building  when  first 
occupied.      But    the    business  of    the   Treasury 


18 


258  GO  VERNMEN  T 

increased  so  fast,  as  the  war  progressed,  that  it 
soon  required  the  entire  building. 

Both  the  Assay  Office  and  the  Treasury,  which 
latter  is  a  grand  and  noble  architectural  pile,  are 
dwarfed  by  the  tall  structures,  eight  to  ten  stories 
in  height,  in  the  vicinity. 

Quite  a  large  force  of  men  are  required  in  the 
Assay  Office — a  superintendent,  assistants,  book- 
keepers, clerks,  guards,  and  workmen  in  the  smelt- 
ing and  refining  department. 

The  metal  is  received  just  as  it  comes  from  the 
mines.  Crude,  bars  of  silver  are  about  fifteen 
inches  long  by  four  inches  thick  and  one  of  them 
is  a  good  lift.  It  is  a  sight  to  sse  molten  masses 
of  gold  and  silver  boiling  and  bubbling  in  the  cru- 
cibles in  process  of  refining  over  intensely  hot 
fires. 

Visitors  are  admitted  at  certain  times  and  shown 
the  processes,  but  must  not  touch  things  unless 
allowed  to  handle  and  examine  the  crude  metal 
or  refined  gold  bars.  The  eye  of  the  conductor 
and  of  the  employees  in  the  room  is  on  the  visitors 
from  the  time  they  enter  until  they  leave,  so  strict 
is  the  surveillance. 

The  refined  gold  is  cast  into  bricks  or  bars, 
which  are  of  all  sizes  in  value  from  $500  to  $5,000 
and  over. 

On  a  visit  the  writer  was  shown  $150,000  in 
gold  bars  on  counters  in   the  refining  room,  and 


FINANCES.  259 

!,ooo,ooo  in  gold  bars  all  in  sight,  in  another 
room  or  vault. 

When  the  rate  of  sterling  exchange  is  up  to 
490^  for  demand,  it  is  profitable  to  export  gold, 
and  it  is  immaterial  whether  the  shipments  are 
made  in  coin  or  gold  bars.  When  exchange  is 
down  to  484,  for  short,  it  is  profitable  to  import 
gold  from  Europe. 

To  see  the  process  of  coining  the  refined  metal 
into  money  one  must  go  to  the  U.  S.  Mint 
at  Philadelphia.  There  the  gold  and  silver  is 
passed  through  machines  and  rolled  out  into  long 
thin  strips  and  is  cut,  tempered  and  stamped. 
There  also  they  have  a  museum  where  the  coins 
of  all  countries  are  on  exhibit  under  glass. 


260  GOVERNMENT 


CHAPTER  XXXIV. 

NEW   YORK    CUSTOM    HOUSE. 

IN  the  great  fire  of  1835,  which  originated  in 
Coenties  Slip,  and  burnt  through  Pearl  Street 
to  its  intersection  with  Beaver  Street,  the  old 
Merchants'  Exchange  was  destroyed,  but  it  was 
the  means  of  checking  the  further  spread  of  the 
conflagration. 

On  the  same  site  a  new  Merchants'  Exchange 
was  erected,  which  took  five  or  six  years  to  build, 
being  completed  in  1842.  The  rotunda  was  for 
years,  afterwards  used  as  a  board  room  by  the 
stock  brokers,  and  rang  with  their  peculiar  cries 
and  clatter  of  voices. 

In  1862  the  Merchants'  Exchange  passed  into 
the  hands  of  the  United  States  Government,  and 
has  ever  since  been  used  as  a  Custom  House. 

It  occupies  an  entire  block  on  Wall,  William 
Streets,  Exchange  Place  and  Hanover  Street.  It 
is  a  massive  building,  built  of  dark  Quincy  granite 
and  solid  masonry,  and  is  absolutely  fire-proof. 

A  series  of  stone  steps  and  platforms  leads 
from  Wall  Street  up  to  the  rotunda  on  the  main 
floor.     The  architrave  over  the  entrance  is  sup- 


FINANCES.  261 

ported  by  a  colonnade  of  twelve  fluted  Ionic  col- 
umns, and  the  ceiling  by  another  line  of  four  col- 
umns, with  two  more  shafts  back  of  them,  one  on 
either  side  of  the  main  doors. 

These  columns  are  about  thirty  feet  high,  in 
single  blocks  weighing  over  thirty  tons  each,  and 
stand  on  immense  solid  pedestals  of  granite. 
They  are  said  to  be  among  the  largest  single  col- 
umns in  the  world.  Those  supporting  the  pro- 
jecting roof  over  the  portico  of  the  Sub-Treasury 
are  very  much  larger,  but  they  are  in  sections  of 
five  pieces  in  each  shaft. 

The  rotunda  in  the  centre  of  the  building  is 
lighted  by  a  magnificent  dome,  and  had  an  enor- 
mous spread  eagle  suspended  from  the  apex. 
The  dome  is  of  solid  stonework  and  glass,  and  is 
supported  by  eight  Corinthian  columns  of  Italian 
marble  over  forty  feet  high,  two  on  each  of  the 
four  sides  of  the  circle. 

In  the  centre  is  a  circular  row  of  desks  facing 
outward  to  a  wide  passage  all  around,  outside  of 
which  is  an  outer  row  of  desks  facing  inward. 

The  rotunda  itself  is  a  building  within  a  build- 
ing, so  to  speak,  and  outside  of  it  are  the  execu- 
tive offices  and  .  the  Collector's  rooms.  Light 
wells  afford  light,  air  and  ventilation  between  the 
inner  and  outer  offices  all  through  the  building. 

The  Custom  House  business  is  enormous,  and 
besides  the  great  number  of  employees  in  the 
building,  a  very  large  force  is  employed  outside 


262  GO  VERNME  N  T  FIN  A  NCE  S. 

all  along  the  river  fronts,  as  gaugers,  warehouse- 
men, appraisers,  accountants  and  examiners.  Gov- 
ernment detectives  are  on  constant  watch  against 
smuggling.  New  tricks  to  evade  payment  of 
duties  are  constantly  invented,  trunks  and  valises 
with  false  sides,  bottoms  and  pockets,  diamonds 
concealed  in  the  heels  of  shoes,  and  in  one  in- 
stance diamonds  inside  of  a  rattle  tied  to  a  baby's 
wrist  escaped  detection. 


TRUE  BANKING.  263 


CHAPTER  XXXV. 

CLEARING  HOUSE   BANKS. 

IN  a  former  chapter  the  proprietors  of  stock 
houses  were  styled  "  bastard  bankers."  Why 
so  ?  Because  they  deposit  their  money  and  keep 
their  accounts  at  the  National  and  State  banks 
and  pay  out  their  money  on  checks  the  same  as 
anybody  else.  Now  there  are  two  kinds  of 
apples,  the  bastard  Spitzenberg  and  the  true 
Spitzenberg.  Hence  in  the  view  of  the  writer 
the  broker-banker  stands  in  the  same  relation  to 
the  true  banker,  who  is  the  depository  and  safe- 
guard of  the  people's  money,  as  the  false  and  the 
true  Spitzenberg  stand  to  each  other. 

Business  men  who  turn  their  money  over  and 
over  in  their  frequent  transactions  usually  keep 
an  account  and  deposit  their  money  with  some 
bank,  against  which  they  draw  their  own  checks 
in  making  payments  to  each  other.  These  checks, 
when  paid  at  the  bank  and  returned  to  the  drawer, 
are  the  best  kind  of  vouchers.  People  who  keep 
no  bank  account  procure  cashier's  drafts  for  safety 
and  convenience  in  transmitting  money  to  more 
or  less  distant  points. 

All  these  checks  and  drafts  come  back  into  as 


264  TRUE 

many  different  banks  as  there  are  in  a  large  city, 
for  payment  or  collection.  Perhaps  not  one  of 
them  are  paid  by  the  bank  on  which  they  are 
drawn  until  they  come  around  to  it  by  due  pro- 
cess of  transfer. 

Banks  all  over  the  country  have  their  corres- 
pondent banks  in  New  York  or  in  other  large 
cities,  through  which  the  drafts  and  checks  of 
their  customers  are  adjusted. 

For  instance,  a  certified  check  or  draft,  drawn 
on  or  by  a  bank  at  Omaha,  Nebraska,  may  be 
sent  payable  to  the  order  of  a  party  in  New  York. 
The  correspondent  of  the  Omaha  bank  may  be 
the  National  Broadway  Bank.  The  party  to  whom 
the  certificate  is  payable  may  keep  his  account 
with  the  Bank  of  America,  and  leaves  the  certifi- 
cate there  for  collection.  The  latter  must  look 
to  the  National  Broadway  Bank  to  adjust  it.  This 
is  done  through  the  settlements  at  the  Clearing 
House. 

Under  the  old  system  of  clearances,  messengers 
had  to  run  around  all  day  between  the  various 
banks  to  exchange  checks  and  drafts  and  have  all 
differences  settled.  Not  unfrequently  the  messen- 
gers had  to  carry  large  rolls  of  bills  or  bags  of 
gold  between  one  bank  and  another  in  settlement, 
at  the  imminent  peril  of  being  robbed  on  the 
streets. 

The  idea  of  a  Clearing  House  system  first  origi- 


BANKING.  265 

nated  with  the  late  Albert  Gallatin,  President  of 
what  is  now  the  Gallatin  National  Bank. 

In  the  latter  part  of  1853  a  Clearing  House 
Association  of  over  fifty  banks  was  formed,  and  a 
new  departure  taken  which  completely  revolution- 
ized and  simplified  the  old  system  of  clearances. 

The  Clearing  House,  formerly  at  the  corner  of 
Wall  and  William  Streets,  now  occupies  the  whole 
building,  above  the  first  story,  at  the  corner  of 
Pine  and  Nassau  Streets,  opposite  the  Sub-Treas- 
ury. 

Imagine  a  long,  airy,  high  ceiling,  well  lighted 
room,  with  a  platform  at  one  end  for  the  Manager, 
Assistant  Manager,  proof  and  other  clerks.  Ex- 
tending lengthwise  are  three  long  rows  of  double 
desks  with  wire  network  partitions  running  across 
the  desks  every  three  feet  apart.  These  form 
separate  desks,  each  with  the  name  of  its  bank. 

Each  bank,  of  which  there  are  about  sixty-five 
in  the  Association,  including  the  Sub-Treasury, 
has  one  Settling  Clerk  and  one  Delivery  Clerk. 
The  Settling  Clerk  sits  at  the  desk  of  his  bank  to 
receive  checks  and  drafts.  The  Delivery  Clerk 
makes  his  rounds  on  the  side  opposite  facing  the 
Settling  Clerks,  to  the  desks  of  all  the  other  banks 
with  whom  he  has  exchanges,  and  distributes  his 
accounts  to  the  Settling  Clerks  to  be  receipted 
for. 

By  a  system  of  debit  and  credit  tickets,  each 
settling  clerk  makes  up  his  accounts  on  a  settling 


266  TRUE 

sheet,  and  credits  or  debits  it  opposite  the  name 
of  the  bank  from  which  the  exchange  was  re- 
ceived. 

He  then  sends  his  debit  and  credit  tickets  to 
the  proof  clerk,  at  the  manager's  desk,  to  be  en- 
tered on  a  proof  sheet,  which,  when  footed  up, 
must  make  the  totals  balance. 

In  case  any  settling  clerk  makes  a  mistake,  he 
must  go  over  his  work  and  send  the  result  on  a 
correction  ticket  back  to  the  proof  clerk,  who 
also  corrects  the  account  on  his  proof  sheet  and 
makes  it  balance. 

The  manager,  his  assistant  and  clerks,  and  the 
clearing  clerks  of  the  various  banks  and  the  Treas- 
ury are  in  their  places.  Promptly  at  10  o'clock 
A.M.,  the  stroke  of  a  gong  brings  all  to  attention. 
At  a  second  stroke  of  the  gong  the  work  commen- 
ces, and  the  business  of  making  exchanges  is  done 
in  from  ten  to  fifteen  minutes,  except  that  the  set- 
tling clerks  remain  to  make  their  proofs,  and 
ascertain  the  differences  between  their  own  and 
the  other  banks. 

All  the  work  is  completed  within  an  hour,  and 
by  1:30  o'clock  P.M.  each  bank  has  received  or 
paid  balances  credited  or  debited  to  it,  through 
the  Clearing  House,  which  is  simply  the  agent  to 
receive  money  from  one  bank  to  pay  over  to  an- 
other in  the  adjustment  of  the  daily  differences. 

On  Saturdays,  or  if  that  happens  to  be  a  holi- 
day, then  on  the  day  previous,  the  bank  statement 


BANKING.  267 

for  the  week  is  made  up,  and  a  few  minutes  after 
12  o'clock,  noon,  the  result  appears  on  the  tapes 
in  all  the  brokers'  offices  in  the  city. 

As  the  tickers  reel  it  off,  it  is  in  form,  with 
variation  of  increase  or  decrease,  like  this :  Re- 
serve Decrease,  $4,086,200;  Loans  Increase,  $r,- 
063,500;  Specie  Decrease,  $4,578,400;  Legal 
Tenders  Decrease,  $586,800  ;  Deposits  Decrease, 
$4,316,000;  Circulation  Decrease,  $39,900. 

This  bank  statement  was  for  the  week  ending 
Saturday,  February  26,  1887,  and  left  the  reserve 
in  the  banks  at  $11,398,000  in  excess  of  the 
twenty-five  per  cent,  limit  required  by  law.  Feb- 
ruary 22d  was  a  holiday,  Washington's  birthday. 
The  total  business  of  the  week  of  five  days  was ; 
Totals.  Changes. 

Loans $368,413,500       Inc.  $1,063,500 

Specie 87,068,800     Dec.    4,578,400 

Legal  tenders      21,189,900         "  586,800 

Deposits 387,462,800         "      4,316,000 

Circulation    .         7,606,700         "  39,900 

The  movement  of  money  has  at  times  a  potent 
influence  on  stock  speculation,  as  it  is  a  sort  of 
barometer  showing  which  way  the  financial  wind 
is  blowing.  The  appearance  of  the  bank  state- 
ment is  eagerly  watched  for  and  the  figures  closely 
scanned. 

At  times  immense  sums  of  ready  money  are 
withdrawn  from  the  banks  to  move  the  crops  in 
the  South  and  West,  or  for  export  to  Europe. 


268  TRUE 

All    this    will  show  in  a  decrease  of  the   bank 
reserves. 

In  speculation  one  of  the  strongest  bear  argu- 
ments is  the  export  of  gold.  When  the  bank  re- 
serve is  close  around  the  legal  limit,  the  bears 
often  resort  to  artifice  to  make  money  still  more 
scarce,  by  withdrawing  millions  of  it  from  the 
banks  to  lock  it  up  in  safe  deposit  vaults  with  the 
object  of  creating  a  money  panic  to  depress  prices 
of  stocks,  and  enable  them  to  cover  their  shorts 
at  a  good  profit. 

Previous  to  the  panic  of  1884  the  bank  reserve 
was  at  one  time  between  six  and  seven  millions 
below  the  twenty-five  per  cent,  limit  required  by 
law. 

After  the  panic,  owing  to  the  increasing  depres- 
sion and  the  withdrawal  of  capital  from  speculation 
and  business  enterprises,  there  was  a  steady  in- 
crease in  the  bank  reserves  until  in  the  Summer 
of  1885  the  Clearing  House  banks  had  the  enor- 
mous sum  of  close  on  to  $65,000,000  in  excess  of 
the  legal  requirements,  and  a  total  reserve  of  up- 
wards of  $160,000,000  of  ready  capital,  which  went 
begging  at  from  one-half  of  one  per  cent,  to  one 
and  two  per  cent,  interest  per  annum  on  call 
loans. 

So  immense  was  the  plethora  of  idle  capital  that 
the  mere  idea  of  the  bears  having  recourse  to  their 
old  tactics  of  cornering  the  money  market  was  so 
chimerical  it  was  not  even  mentioned  till  the  Fall 


BANKING.  269 

and  Winter  of  1886-7,  when  the  bank  reserve  be- 
came reduced  to  less  than  $8,000,000  above  the 
legal  limit  at  one  time. 

Since  the  organization  of  the  Clearing  House 
system  in  1853  the  total  transactions  up  to  the 
Summer  of  1886,  represented  the  stupendous 
figures  of  $777,400,000,000,  which  in  words,  seven 
hundred  and  seventy  seven  billion  four  hundred 
millions  of  dollars.  Few  can  grasp  the  immensity 
of  such  a  sum. 

The  largest  business  on  any  one  day  was  about 
$296,000,000.  The  smallest  daily  balance  paid  by 
the  Clearing  House  to  any  one  bank  was  ten 
cents,  and  the  least  paid  to  it  by  any  bank  to  bal- 
ance accounts  was  one  cent. 

Out  of  the  vast  sums  paid  on  balances  through 
the  Clearing  House  in  33  years  of  its  existence,  it 
was  estimated  that  $1,600,000,000  was  paid  in  gold 
coin,  weighing  upwards  of  3,000  tons  of  2,000 
pounds  each,  since  the  resumption  of  specie  pay- 
ments in  1879. 

Since  the  issue  of  gold  certificates  by  the  Gov- 
ernment, these  have  passed  current,  in  place  of 
the  coin,  in  making  the  daily  settlements.  All 
the  expenses  of  the  Clearing  House  are  paid  by 
assessment  on  the  banks  belonging  to  the  Associ- 
ation. 

For  the  absolute  perfection  of  this  comprehen- 
sive and  magnificent  system  of  expediting  a  vast 
business   with   accuracy,  and   the   least   possible 


2/Q  TRUE 

friction,  great  credit  is  due  to  the  Manager,  Mr. 
W.  A.  Camp,  and  to  no  one  more  than  to  the 
Assistant  Manager,  Mr.  John  P.  Ritter. 

The  most  profitable  source  of  revenue  to  the 
banks  are  the  discounts  on  commercial  paper, 
which  range  from  4  to  6J  per  cent. 

Some  Institutions,  notably  the  Chemical  Bank, 
have  one  or  more  experts  to  pass  on  the  paper 
presented.  They  must  be  familiar  with  the  com- 
mercial rating  of  the  makers  whose  paper  most 
frequently  comes  on  the  market.  They  must  be 
able  to  judge  if  it  is  doubtful,  good,  or  gilt  edged, 
and  to  decide  quickly  whether  to  accept  or  reject 
it  without  recourse  to  the  books  of  R.  G  Dun  or 
Bradstreet  in  every  case. 

Time  is  money,  and  with  such  expedition  an 
immense  amount  of  the  most  profitable  kind  of 
business  is  done  within  banking  hours. 

Next  to  discounts,  the  interest  on  loans  on 
stock  collateral  is  very  profitable  when  money  is 
in  brisk  demand.  The  banks  occupy  relatively 
about  the  same  positions  in  making  loans  on 
stocks  to  banker  brokers,  as  the  latter  do  in  car- 
rying stocks  on  margins  for  their  customers.  In 
case  of  danger  they  can  demand  more  collateral 
to  be  put  up  as  security,  or  call  in  their  loans,  or 
if  necessary  throw  their  stock  collateral  on  the 
market  to  be  sold. 

In  proportion  to  the  amount  of  its  capital, 
$300,000  divided-  into  3,000    shares  of    the   par 


BANKING.  271 

value  of  $100  per  share,  the  Chemical  National 
Bank,  in  point  of  wealth  and  amount  of  dividends 
it  pays,  overtops  any  other  single  bank  in  the 
city. 

In  the  Summer  of  1886  it  had  a  surplus  of 
$4,500,600,  and  paid  25  per  cent,  dividends  on 
the  par  value  bi-monthly.  $3,200  per  share  was 
bid  for  its  stock  at  one  time. 

In  other  words,  its  original  capital  increased 
from  $300,000  to  a  market  value  of  $9,600,000. 
The  par  value  of  its  stock  $100  per  share  increased 
to  a  market  value  of  $3,200  per  share.  And  it 
pays  dividends  at  the  rate  of  $600  per  share  per 
annum. 

Next  in  wealth  was  the  First  National  Bank, 
with  a  capital  of  $500,000 — par  100 — which  had  a 
surplus  of  $4,322,800,  and  paid  10  per  cent,  divi- 
dends per  quarter.  $1,050  per  share  was  bid  for  it 
in  1880. 

The  American  Exchange  Bank  and  the  Bank  of 
Commerce  had  a  capital  of  $5,000,000  each — par 
100,  with  a  surplus  of  $1,382,100  and  $3,063,200 
each  respectively.  They  paid  3!  and  4  per  cent, 
semi-annually,  and  their  stock  was  quoted  at  133 
and  168  each  per  share. 

It  is  a  singular  fact  that  most  of  the  banks  which 
have  the  least  capital  are  the  ones  that  make  the 
best  profits  and  pay  the  best  dividends. 

The  Lincoln  National  Bank  has  the  strongest 
safe   deposit   vaults   of  any  bank   in   this   coun- 


272  TRUE  BANKING. 

try,  and  it  is  here  the  Vanderbilts  keep  their  per- 
sonal wealth.  After  W.  H.  Vanderbilt's  death 
it  was  no  small  task  to  go  over  the  vast 
number  of  stocks,  bonds  and  securities  in  the 
vaults  and  divide  them  up  according  to  the  terms 
of  his  will.  And  in  no  other  country  probably 
could  a  family  have  an  ex-Cabinet  Minister  as 
President  of  their  Bank*.  That  is  what  Thomas 
L.  James,  ex-Postmaster-General  is. 

The  Savings  Banks  are  a  great  blessing  to 
people  of  small  means.  They  are  the  conser- 
vators and  promoters  of  economy  and  thrift. 
Without  them  people  who  could  lay  by  only  an 
insignificant  pittance  per  week  or  month  would 
have  no  incentive  to  be  saving  and  to  make 
provision  for  sickness  and  old  age.  The  small 
sums  turned  into  the  Saving  Banks  by  hundreds 
of  the  middling  and  poor  class  of  people  to  draw 
interest,  make  an  aggregate  of  hundreds  of 
milions  of  wealth. 


VISITORS'  DIRECTOR  Y.  273 


VISITORS'  DIRECTORY. 


IN   AND    AROUND    NEW  YORK. 

New  York  is  the  fourth  largest  city  on  the  globe. 
It  is  only  exceeded  in  population  by  London, 
Paris  and  Canton.  So  rapid  is  the  increase  in 
buildings  and  inhabitants  that  two  or  three  years 
hence  it  will  probably  surpass  Canton  and  take 
rank  as  the  third  greatest  city  of  the  world.  Its 
present  population  is  estimated  at  1,400,000.  With 
Brooklyn  and  other  cities  and  villages  within  a 
radius  of  twenty  miles  of  the  New  York  City 
Hall  there  are  now  probably  about  3,000,000  of 
people. 

Manhattan  Island  is  a  long,  narrow  strip  of  land 
but  little  more  than  two  miles  across  in  its  widest 
part.  It  is  admirably  adapted  to  the  elevated 
railway  system  it  enjoys,  of  which  it  has  four  lines, 
all  with  a  terminus  at  the  Battery,  and  all,  except 
the  Ninth  avenue  line,  running  through  to  the 
Harlem  River.  It  has  numerous  surface  railways 
and  is  being  rapidly  gridironed  with  cross-town 
lines.  Already  the  march  of  improvements  and 
means  of  rapid  transit  is  in  the  direction  of  under- 
19 


2  74  VISITORS' 

ground  railways  and  pneumatic  tubes  running  the 
length  of  the  island  ;  the  first  for  both  passengers 
and  freight,  the  last  to  shoot  packages,  messages 
and  letters  through  from  one  point  to  another. 

Strangers  to  the  city  cannot  take  in  half  the 
sights  without  a  guide  to  post  and  direct  them. 
The  central  point  of  direction  is  from  the  City 
Hall,  which  is  about  three-fourths  of  a  mile  above 
the  extreme  southern  end  of  the  island  at  the 
Battery. 

City  Hall  Park  is  a  triangle  on  the  east  side  of 
Broadway.  The  Post  Office  is  on  the  south  point, 
back  of  it  is  the  City  Hall,  and  back  of  that,  on 
Chambers  Street,  is  the  County  Court  House,  that 
Tweed  built.  Park  Row,  Printing  House  Square, 
runs  from  the  southern  point  of  the  triangle,  on 
the  east  side,  to  Chatham  Street  and  the  New 
York  end  of  the  Brooklyn  Bridge.  Nearly  all  the 
great  newspaper  offices  are  in  this  vicinity. 

The  Astor  House  is  on  the  west  side  of  Broad- 
way, and  St.  Paul's  Church  is  on  the  next  block 
south,  corner  of  Vesey  Street. 

One  block  south  of  the  Post  Office,  Fulton  Street 
crosses  the  city.  Fulton  Market  on  the  East 
River  end  and  Washington  Market  on  the  North 
River  side  are  perfect  museums  of  meats,  sea  food 
and  vegetables.  The  old  United  States  Hotel  is 
on  Fulton  Street,  a  few  blocks  from  Fulton  Ferry. 

On  the  west  side  of  Broadway,  south  to  the  Bat- 
tery, are  the  tall  buildings  of  the  North  British  and 


DIRECTORY.  275 

Mercantile  Insurance  Co.,  and  the  Western  Union 
Telegraph  Co.  The  Trinity  Building  and  Trinity 
Church  and  churchyard  occupy  the  whole  block 
from  Thames  to  Rector  Streets,  and  Broadway  to 
New  Church  Street.  This  is  one  of  the  most  in- 
teresting places  in  the  city  and  recalls  many  mem- 
ories of  by-gone  generations.  Here  is  the  grave 
of  Charlotte  Temple ;  the  tombs  of  Alexander 
Hamilton,  Albert  Gallatin,  and  Captain  James 
Lawrence,  who  was  killed  in  action  between  the 
frigates  Chesapeake  and  Shannon.  Lawrence's  last 
words  were,  "  Don't  give  up  the  ship."  Many  of 
the  old  brown  tombstones  are  fast  crumbling  to 
decay.  Parts  of  the  graveyard  are  honeycombed 
with  old  vaults,  and  it  is  only  at  long  intervals 
that  one  is  opened  to  give  sepulchre  to  a  descend- 
ant of  some  old  family. 

On  the  north  side  near  the  Trinity  building  is 
the  Martyrs'  Monument  to  the  memory  of  the 
men  who  died  victims  to  British  cruelty  in  the 
old  Sugar  House.  It  is  40  or  45  feet  high,  of 
brown  stone.  The  base  is  about  15  feet  square 
and  20  feet  high,  and  is  surmounted  with  a  balda- 
chin, from  the  roof  of  which  rises  a  pinnacle  cap- 
ped with  a  stone  sphere  on  which  is  an  eagle  with 
outspread  wings. 

The  steeple  of  Trinity  Church  was  formerly  a 
great  point  of  lookout  to  take  a  bird's-eye  view 
of  the  city.  It  is  now  not  much  used,  as  visitors 
can  ascend  by  elevators   to   the   roofs  of  the  tall 


276  VISITORS' 

buildings  in  the  vicinity  without  the  fatigue  of 
climbing  the  steep  spiral  staircase. 

Below  Rector  Street  are  the  offices  of  the 
Adams  and  the  American  Express  Companies. 
Near  Bowling  Green  is  the  Stevens  House,  and 
the  Washington  Building,  1 1  stories  high,  is  at 
the  foot  of  Broadway,  at  Battery  Park. 

On  the  east  side  of  Broadway  from  Fulton 
Street  south,  is  the  "  Evening  Post  "  Building. 
The  Equitable  Insurance  Building  now  covers 
about  three-fourths  of  the  entire  block  on  Broad- 
way, Cedar,  Pine  and  Nassau  Streets.  It  was 
recently  enlarged  to  more  than  twice  its  original 
size  at  a  cost  of  probably  between  one  and  two 
millions  of  dollars,  all  of  which,  with  the  land,  was 
paid  for  from  the  profits  on  forfeited  life  insur- 
ance policies.  It  is  8  to  9  stories  high,  and  the 
hundreds  of  rooms  rented  are  a  most  profitable 
source  of  revenue  to  the  Equitable  Company,  be- 
sides those  used  for  its  own  offices. 

The  United  Bank  Building,  on  the  corner  of 
Wall  Street,  is  9  stories  high  above  the  basement. 
It  takes  its  name  from  the  fact  that  the  First 
National  Bank  and  the  Bank  of  the  Republic 
occupy  the  entire  first  floor  not  used  for  hall  room 
and  elevators. 

The  Schermerhorn  building  is  a  tall,  narrow 
structure,  with  as  many  faces  as  the  Trimurti  or 
triad  of  the  Vedas.  On  Broadway  the  hall  runs 
through  to   a  transverse  hall  extending  through 


DIRECTORY.  277 

the  block  from  Wall  to  Pine  Streets.  It  adjoins 
the  United  Bank  building  on  the  north  and  east. 

The  United  States  Express  Company  and  the 
Consolidated  Stock,  Mining  and  Petroleum  Ex- 
change is  on  the  next  block  down  Broadway. 
Just  beyond,  on  the  corner  of  Exchange  Place,  is 
the  Exchange  Court  building,  belonging  to  the 
Astor  family. 

The  new  Standard  Oil  building,  near  Bowling 
Green,  is  nine  stories  high  on  Broadway  and  ten 
stories  high  on  New  Street.  It  towers  far  above 
its  neighbors  and  is  of  vast  dimensions,  being 
87^  feet  wide  and  209  feet  deep  through  the 
block.  It  is  165  feet  from  the  curb  to  the  roof, 
and  from  the  foundation  stone  to  the  top  of  the 
granite  work  it  is  190  feet.  The  Broadway  front 
is  of  white  granite,  massive  granite  steps  lead  up 
into  a  vestibule  of  pure  white  Italian  marble, 
while  marble  stairways  climb  story  after  story 
until  the  "  outlook  room  "  is  reached.  From  this 
the  view  overlooking  the  city,  Long  Island,  New 
Jersey,  Staten  Island,  far  down  to  the  Narrows, 
the  Brooklyn  Bridge,  the  bay  and  islands  in  the 
harbor,  is  magnificent  beyond  description. 

The  great  Welles  building  adjoins  the  last,  and 
the  Produce  Exchange  is  across  Beaver  Street 
opposite.  South  of  Bowling  Green  are  the  offices 
of  the  English,  French  and  German  consulates. 
Those  of  other  nations  are  near  by  on  State 
Street  and  Broadway. 

CTNJ 


27  8  VISITORS' 

The  old  Produce  Exchange,  on  the  block  at 
Whitehall, Water,  and  Pearl  Streets, was  purchased 
by  the  United  States  Government,  and  a  new- 
building  is  now  being  erected  for  army  purposes. 
Over  the  front  entrance  is  the  inscription,  "  War 
1886  Department,  United  States  Army  Building." 

The  Battery  covers  an  area  of  about  20 
acres  and  has  beautiful  walks  and  shade  trees. 
Castle  Garden  is  on  the  west  side  by  the  sea  wall. 
In  the  old  times  it  was  the  resort  of  the  richest 
people  in  the  city,  who  then  lived  in  the  vicinity. 

The  South  and  Hamilton  Avenue  ferries  to 
Brooklyn,  the  ferry  to  Bay  Ridge,  the  Staten 
Island  ferries,  the  elevated  railway  terminus,  the 
Barge  Office  and  the  Associated  Press  marine 
news  office  are  all  at  the  foot  of  Battery  Park. 

Off  from  Broadway,  at  8,  10  and  12  Wall 
Street,  is  the  tall  Astor  Building  running  through 
the  block  to  Pine  Street.  Opposite,  at  9  Wall 
Street,  is  the  Mortimer  building.  The  entrance 
to  the  gallery  of  the  Stock  Exchange  is  just 
below  at  13  Wall  Street.  Further  down,  east  of 
Broad  Street,  is  the  Sub-Treasury,  Assay  Office, 
the  Drexel  and  the  great  Mills  buildings.  The 
Bank  of  the  Manhattan  Company  is  the  most 
magnificent  building  on  Wall  Street.  The  Cus- 
tom House  is  the  most  solid  and  sombre.  The 
Cotton  Exchange  is  around  on  Beaver  Street,  near 
the   Custom   House,   and    the   building   formerly 


DIRECTORY.  279 

occupied  by  the  Marine  Bank  is  corner  of  Wall 
and  Pearl  Streets. 

On  Nassau  Street,  corner  of  Pine,  is  the  Clear- 
ing House,  and  one  block  beyond  is  the  Mutual 
Life  Insurance,  one  of  the  most  magnificent  office 
buildings  in  the  city.  Ex-President  Arthur  had 
his  office  there,  and  the  directory  in  the  hall  read  : 

Knevals  &  Ransom, 
Chester  A.  Arthur. 

Above  the  City  Hall,  corner  of  Broadway  and 
Chambers  Street,  is  the  Stewart  building,  formerly 
A.  T.  Stewart's  down  town  store.  Chambers 
Street  is  occupied  very  largely  by  the  wholesale 
hardware  trade,  while  the  wholesale  dry  goods 
district  is  between  Reade  and  Canal  Streets. 

The  Tombs  city  prison  is  about  six  blocks  north 
of  the  City  Hall,  on  Centre  Street.  It  is  an  impos- 
ing building  of  the  Egyptian  order  of  architec- 
ture. 

The  Bowery  is  a  wide  busy  street,  a  few  blocks 
east  of  Broadway,  running  from  Chatham  Square 
to  Astor  Place.  It  is  mostly  occupied  by  Jews 
and  Germans. 

The  Astor  Free  Library  on  Lafayette  Place  is 
one  of  the  most  beneficent  institutions  in  the  city. 
The  buildings  and  books  are  valued  at  over 
$1,000,000. 

Hotels  are  very  numerous,  and  the  best  ones 
are  mostly  in  the  vicinity  of  Madison  Square. 


280  VISITORS' 

Union  Square  at  Broadway  and  Fourteenth 
Street  is  a  fine  little  park  of  between  3  and  4  acres. 
It  is  a  nice  place  with  a  fountain  and  shade  trees, 
and  is  surrounded  by  handsome  buildings.  It  has 
statues  of  Washington,  Lafayette  and  Lincoln. 

Madison  Square,  the  finest  small  park  in  the 
city,  is  between  Broadway  and  Madison  Avenue 
and  Twenty-third  and  Twenty-sixth  Streets.  It 
is  beautifully  laid  out  with  walks,  shade  trees,  a 
fountain,  grass  and  flowers.  It  has  a  bronze  stat- 
ute of  Wm.  H.  Seward.  Madison  Square  Garden 
is  close  by,  occupying  the  entire  block  between 
Madison  and  Fourth  Avenues  and  Twenty  sixth 
and  Twenty-seventh  Streets. 

Gramercy  Park,  at  Twentieth  and  Twenty-first 
Streets  and  Third  and  Fourth  Avenues,  is  a  fine 
place,  surrounded  by  elegant  residences. 

The  Cooper  Union,  at  junction  of  Third  Avenue 
and  the  Bowery,  is  a  massive  brown  stone  build- 
ing, six  stories  high,  and  cost  $630,000,  Rooms 
are  set  apart  for  a  free  school  of  science  and  art, 
with  a  library  and  free  reading  room,  which  was 
endowed  with  $150,000  by  the  late  Peter  Cooper. 

The  Bible  House  is  on  Eighth  and  Ninth 
Streets,  between  Third  and  Fourth  Avenues. 

The  Mercantile  Library  is  at  Clinton  Hall, 
Astor  place,  and  contains  about  185,000  volumes. 
The  initiation  fee  is  $1,  with  a  charge  of  $4  and 
$5  a  year  for  the  library  privileges. 


DIRECTORY.  281 

The  University  of  the  City  of  New  York  is  on 
the  east  side  of  Washington  Square. 

Chickering  Hall  is  at  Fifth  Avenue  and  West 
Eighteenth  Street. 

The  College  of  the  City  of  New  York  is  corner 
of  Twenty-third  Street  and  Lexington  Avenue. 

College  of  Physcians  and  Surgeons  is  corner 
Twenty-third  Street  and  Fourth  Avenue. 

Columbia  College  is  on  Forty-ninth  and  Fif- 
tieth Streets,  between  Fourth  and  Madison  Ave- 
nues. 

New  York  College  of  Dentistry  is  at  Twenty- 
third  Street  and  Second  Avenue. 

The  Morgue  and  Bellevue  Hospital  are  near  the 
foot  of  Twenty-sixth  Street  and  East  River. 

The  American  Art  Gallery  is  at  6  East  Twenty- 
third  Street. 

The  Eden  Mus^e  is  on  Twenty-third  Street,  be- 
tween Fifth  and  Sixth  Avenues. 

Academy  of  Music,  Fourteenth  Street  and  Irv- 
ing Place. 

State  Arsenal,  Seventh  Avenue  and  Thirty-fifth 
Street. 

Ludlow  Street  Jail  is  on  Ludlow,  near  Grand 
Street. 

Jefferson  Market  Court  and  Prison,  Sixth  Ave- 
nue and  West  Tenth  Street. 

Institution  for  the  Blind,  Ninth  Avenue,  be- 
tween Thirty-third  and  Thirty-fourth  Streets. 


282  VISITORS' 

Coal  and  Iron  Exchange,  Cortlandt  and  New- 
Church  Streets. 

The  Croton  Water  Distributing  Reservoir  is  on 
Fifth  Avenue,  between  Fortieth  and  Forty-second 
Streets.  Just  back  of  this  is  the  old  site  of  the 
Crystal  Palace. 

Lenox  Library  and  Art  Gallery,  Fifth  Avenue 
and  Seventieth  Street. 

The  Rogues'  Gallery  is  at  Police  Head-quarters, 
300  Mulberry  Street. 

There  are  over  400  churches  in  the  city  of  va- 
rious denominations. 

Grace  Church,  at  Broadway  and  Tenth  Street, 
is  one  of  the  most  fashionable  in  the  city,  and 
next  to  Trinity  Parish,  is  the  richest  corporation 
of  the  P.  E.  denomination. 

St.  Patrick's  Cathedral,  Fifth  Avenue,  Fiftieth 
and  Fifty-first  Streets,  is  the  most  splendid  church 
edifice  in  America.  The  height  of  the  front  gable 
is  156  feet,  and  the  towers  and  spires,  when  com- 
pleted, will  be  330  feet  in  height.  The  building  is 
of  white  marble  on  a  base  of  granite.  The  inte- 
rior appearance  is  as  grand  as  the  exterior.  The 
estimated  cost  when  completed  is  $2,500,000. 
The  Cathedral  is  open  to  visitors  daily.  The  resi- 
dences of  some  of  the  greatest  millionaires  in  the 
city  are  in  the  vicinity. 

High  Bridge  Croton  Aqueduct  is  at  One  Hun- 
dred and  Seventy-fifth  Street,  Harlem  River.  To 
reach  this  point  take  Sixth  Avenue  elevated  trains 


DIRECTORY.  283 

from  South  Ferry  and  intermediate  stations  to 
One  Hundred  and  Fifty-fifth  Street  ;  thence  by 
the  Northern  Railroad,  one  mile,  to  the  bridge. 

Fort  Washington  is  on  the  Hudson  River  bluffs 
around  One  Hundred  and  Seventy-fifth  Street. 
The  earthwork  and  garrison  of  3,000  men  was  cap- 
tured by  the  British  in  1776. 

The  New  York  Institution  for  the  Deaf  and 
Dumb,  the  largest  school  of  its  kind  in  America, 
is  on  One  Hundred  and  Sixty-second  Street,  near 
the  North  River. 

Of  play  houses  of  the  better  class  there  are 
more  than  a  score,  and  many  dime  museums. 
Concert  Halls  are  very  numerous,  and  many  of 
them  of  the  most  disreputable  character. 

A  monster  painting  by  the  noted  French  artist, 
Paul  Philoppotteaux,  entitled  "  TheCyclorama  of 
the  Battles  of  Vicksburg,"  had  a  large  run,  but  is 
soon  to  be  removed  to  the  West. 

The  fare  on  the  elevated  railroads  is  now  five 
cents  at  all  hours  and  for  all  distances.  The  trip 
to  Harlem  Bridge  over  the  Third  Avenue  line, 
passing  through  the  Bowery,  is  a  pleasant  one. 
This  road  lands  passengers  right  at  the  Grand 
Central  Depot. 

The  most  delightful  excursion  inside  the  city  is 
by  the  Sixth  Avenue  elevated,  gi  miles  from  the 
Battery  to  One  Hundred  and  Fifty-fifth  Street, 
within  one  mile  of  High  Bridge,  all  for  five  cents 
The    high  trestlework  above  One    Hundred  and 


284  VISITORS' 

Fourth  Street  excites  admiration  and  wonder.  The 
Count  De  Lesseps,  when  passing  over  the  highest 
point  of  the  road,  was  asked  his  opinion  of  it  as 
a  triumph  of  engineering.  He  replied  sententiously, 
with  one  word  :  "  Stupendous."  In  places  pas- 
sengers passing  look  over  the  tops  of  four  story 
and  basement  buildings. 

The  Central  Park  extends  from  Fifty-ninth  to 
One  Hundred  and  Tenth  Street,  and  from  Fifth 
to  Eighth  Avenues,  an  area  of  about  840  acres. 
It  is  reached  by  Sixth  Avenue  elevated  trains  to 
Fifth-ninth  Street  and  by  various  lines  of  horse 
cars.  It  has  eighteen  entrances,  designated  as  the 
Scholars'  Gate,  Artists'  Gate,  Hunters'  Gate, 
Mariners'  Gate,  Warriors'  Gate,  etc.  It  has 
bridges,  tunnels,  terraces,  marble  arches  and  foun- 
tains, lakes  with  pleasure  boats,  a  carrousel,  casino, 
rambles  and  carriage  drives.  The  Mall  is  a  grand 
promenade  near  the  line  of  Seventy-second  Street. 
Near  this  point  are  the  statues  of  Columbus,  Com- 
merce, Halleck,  Humboldt,  hunter  and  dog,  Maz- 
zini,  Morse,  Schiller,  Scott,  Shakespeare,  Webster, 
and  a  bronze  statute  in  memory  of  the  members 
of  New  York's  famous  Seventh  Regiment  who  fell 
in  battle  during  the  civil  war.  The  menagerie  in 
the  old  Arsenal  is  near  Fifth  Avenue  at  Sixty- 
fourth  Street.  The  Obelisk  and  Metropolitan 
Museum  of  Art  are  near  Fifth  Avenue  at  Eighty- 
third  Street.  The  art  gallery  is  full  of  fine  paint- 
ings,  many   of   great  value.     "  Columbus  before 


DIRECTORY.  285 

Ferdinand  and  Isabella"  cost  $20,000.  There  are 
statues  and  reclining  statues  in  pure  white  marble, 
one  of  Queen  Semiramis,  and  one  of  Cleopatra 
and  the  asp  ;  old  coins,  jugs,  pottery  and  rare 
unique  specimens  of  the  lares  and  penates  of  the 
ancients,  possibly  dating  back  to  the.  time  of 
Herodotus  and  Homer.  The  great  Croton  Water 
Reservoir  covers  143  acres,  between  Seventy-ninth 
and  Ninety-sixth  Streets. 

The  Brooklyn  Bridge  may  be  rightly  called 
"  the  eighth  wonder  of  the  world."  Its  length  is 
5,989  feet,  width  85  feet,  height  of  towers  above 
high  water  278  feet,  centre  of  river  span  is  about 
135  feet  above  high  tide  It  has  two  car  tracks,  two 
roadways  and  a  wide  promenade.  In  the  single  year 
1886,  24,478,324  passengers  crossed  over  it.  If  all 
these  were  placed  three  abreast,  and  allowing  two 
feet  between  columns,  the  line  would  reach  from 
New  York  to  San  Francisco,  and  there  would  be 
people  enough  left  over  to  populate  a  city  like 
Brooklyn  with  its  800,000  inhabitants. 

All  tourists  will  wish  to  visit  Gen.  Grant's  tomb 
at  Riverside  Park.  This  is  reached  by  Sixth 
Avenue  elevated  trains,  stopping  at  One  Hundred 
and  Twenty-fifth  Street  station. 

In  the  Summer  season  the  most  pleasant  water 
excursions  are  to  Starin's  Glen  Island  on  the 
Sound,  passing  Blackwell's,  Ward's,  and  other 
islands  near  Hell  Gate.  A  trip  up  the  North 
River  to  Fort  Lee  on  the  Palisades,  or  down  the 


286  VISITORS' 

bay  to  Staten  Island  and  through  the  Kills,  is 
pleasant.  A  taste  of  the  ocean  may  be  had  by 
taking  boats  to  Coney  Island  and  Rockaway 
Beach,  passing  between  the  fortifications  at  the 
Narrows.  An  extended  ocean  sail  of  thirty  miles 
to  Long  Branch  costs  but  60  cents  at  excursion 
rates. 

Railways  radiate  in  all  directions,  conveying 
pleasure  seekers  to  Coney  Island  and  Rockaway 
Beach  within  half  an  hour  to  an  hour.  Others 
run  to  various  resorts  on  Long  Island,  up  the 
Hudson  River,  along  the  Sound,  and  to  places  in 
New  Jersey. 

Governor's  Island,  the  Military  Headquarters 
of  the  Department  of  the  Atlantic,  lies  1,066  yards 
southeast  of  the  Battery  and  contains  about  70 
acres.  On  the  east  ridge  of  the  island  are  the 
residences  of  Major-General  Schofield  and  other 
officers  of  the  post.  Above  the  landing  is  the 
Guard  House,  with  a  squad  on  hand  to  take  turns 
in  relieving  the  sentinel  on  duty,  day  and  night. 
A  military  museum  is  near  by,  containing  a  great 
many  curiosities,  not  the  least  of  which  is  the 
horse,  stuffed,  mounted  and  accoutred,  that  Gen. 
Sheridan  rode  "  From  Winchester,  twenty  miles 
away." 

On  the  north  centre  of  the  island  is  Fort  Co- 
lumbus, an  immense  earthwork,  inside  of  which 
are  the  soldiers'  quarters  in  buildings  ranged 
around  the  four  sides  of  a  square.     It  can  mount 


DIRECTORY.  287 

105  guns.  South  Battery  commands  the  ap- 
proaches towards  that  end  of  the  island.  Castle 
William,  a  round  tower  on  the  northwest  end, 
was  built  in  1812.  It  has  casemates  for  eighty 
guns,  and  forty  can  be  mounted  en  barbette.  It 
is  sometimes  used  as  a  military  prison  for  deserters 
and  others.  Along  the  north  shore  are  to  be 
seen  immense  piles  of  cannon  balls  and  dismounted 
cannon  and  mortars.  Ferry  is  run  by  the  Gov- 
ernment free. 

Bedloe's,  now  called  Liberty,  Island,  is  2,950 
yards  southwest  from  the  Battery.  Formerly  the 
site  of  Fort  Wood,  it  is  now  the  resting  place  of 
the  great  Bartholdi  statue  of  "Liberty  Enlighten- 
ing the  World."  The  pedestal  and  statue  is  305 
feet  high  from  foundation  to  top  of  torch.  It  is 
only  exceeded  in  height  in  this  country  by  the 
Washington  Monument,  555  feet,  and  Philadel- 
phia City  Hall,  535  feet.  Ferry  from  Barge  Office 
at  the  Battery  ;  fare,  25  cents  round  trip. 

Ellis,  sometimes  called  Hangman's,  Island,  is 
north  by  west  of  Bedloe's,  and  is  the  site  of  Fort 
Gibson.  Between  it  and  the  New  Jersey  shore  is 
another  island,  with  a  Government  storehouse  and 
powder  magazine. 

In  Brooklyn  the  chief  point  of  interest  will  be 
the  United  States  Navy  Yard,  with  entrance  at 
the  York  street  gate.  The  most  interesting  things 
and  places  are  the  museum  and  library  in  the 
Lyceum  building.     The  immense  dry  dock,  built 


288  VISITORS' 

of  granite,  is  the  largest  in  the  world,  being  307 
feet  long  by  98  feet  wide,  top  measurement,  and 
286  feet  long  by  35  feet  wide  at  bottom.  It  cost 
over  $2,000,000.  A  curious  rope  ferry  conveys 
visitors  over  to  the  Cob  dock,  where  the  Receiv- 
ing Ship  Colorado  is  moored.  It  is  a  sort  of 
house,  built  up  on  the  hull  of  a  ship  to  a  height 
of  four  or  five  stories,  and  looks  like  a  Noah's 
Ark.  Near  by  is  a  sailors'  chapel  and  library, 
scrupulously  neat.  It  has  immense  store-houses 
and  machine  shops,  the  Marine  Barracks  and 
Marine  Hospital.  Usually  there  is  a  ship  of  war 
alongside  the  dock  refitting  or  taking  in  stores, 
which  visitors  may  be  allowed  to  inspect. 

Prospect  Park,  Brooklyn's  pleasure  ground, 
covers  between  500  and  600  acres.  The  site  is  ele- 
vated, overlooking  the  city,  New  York,  the  bay  and 
ocean.  It  is  covered  with  broad  meadows,  wooded 
hills  and  depressions,  a  lake,  ponds  and  parade 
ground.  The  Ocean  Parkway,  a  grand  boulevard, 
210  feet  wide,  runs  from  the  Park  to  the  Con- 
course at  Coney  Island. 

Greenwood  Cemetery,  in  the  south  part  of 
Brooklyn,  is  one  of  the  finest  in  this  country. 
It  contains  450  acres,  and  has  many  fine  monu- 
ments, tombs,  and  a  Receiving  Tomb  which  will 
hold  about  1,500  bodies.  The  interments  in  it 
number  over  200,000. 

Cypress  Hills  Cemetery,  about  one  mile  east  of 


DIRECTORY.  289 

Brooklyn,  contains  400  acres,  and  is  very  hand- 
somely laid  out. 

To  get  an  idea  of  the  immense  commerce  of  the 
Port  of  New  York  one  has  only  to  visit  the  great 
storehouses,  bonded  warehouses  and  grain  eleva- 
tors along  the  Brooklyn  water  front  from  the 
Navy  Yard  to  and  up  along  the  Gowanus  Canal. 
The  receipts  from  home  and  foreign  ports,  and 
the  shipments  for  home  consumption  and  export 
are  enormous. 

Brooklyn  is  par  excellence  a  city  of  residences. 
It  is  also  the"City  of  Churches."  Plymouth  Church, 
on  Orange  Street,  and  the  Brooklyn  Tabernacle, 
on  Schermerhorn  Street,  have  a  world-wide  fame. 
The  former  will  seat  about  2,800  persons,  and  the 
latter  over  3,000. 

Second  only  to  Mr.  Beecher  is  the  fame  of  Rev. 
T.  De  Witt  Talmage,  and  his  audiences  are  only 
limited  by  the  size  of  the  Tabernacle  to  hold 
people  packed  like  sardines.  We  have  Talmage 
still. 

Rev.  Henry  Ward  Beecher's  fame  was  so  far 
reaching  that  Plymouth  Church  was  always  filled 
to  overflowing  to  hear  him.  In  New  York  when 
a  stranger  asked  the  way  to  Plymouth  Church  he 
was  "  told  to  cross  Fulton  Ferry  and  follow  the 
crowd."  But,  alas!  At  the  very  time  of  this  writ- 
ing, Mr.  Beecher's  body  lies  cold  in  death,  awaiting 
burial.  The  pulpit  and  his  coffin,  as  his  remains 
lie  in  state  in  the  church  he  loved  so  well,  are 
20 


290 


VISITORS'  DIRECTORY. 


banked  with  flowers,  while  an  almost  endless  pro- 
cession are  passing  by  for  a  last  look.  The  pub- 
lic sorrow  is  universal.  No  man  in  America  will 
be  so  missed  as  he.  Who  can  fill  the  void  ?  He 
was  the  greatest  preacher  and  orator  of  his  time. 
Take  him  all  in  all  he  was  the  greatest  man  this 
country  has  produced.  His  last  words,  in  answer 
to  the  doctor,  were:  "  You  say  I  cannot  get  well." 


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NOV  8    1965  65 

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